San Francisco — The Federal Trade Commission has opened a preliminary antitrust investigation into Google Inc.’s planned $3.1 billion purchase of the online advertising company DoubleClick.
Citing an industry executive who had been briefed on the FTC’s preliminary antitrust investigation, said the inquiry was opened last week after it was determined that the commission, rather than the Justice Department, should conduct the review, said the executive, who asked not to be identified because he had not been authorized to speak. The two agencies split the duties of antitrust enforcement.
Google said it was confident that the deal would withstand scrutiny.
An F.T.C. spokesman said yesterday that the agency did not comment on pending nquiries.
The review of the deal was widely expected after Mountain View-based Google announced in April it plans to purchase the Internet ad-services company DoubleClick, a company that helps its customers place and track online advertising, from private-equity firm Hellman & Friedman for $3.1 billion — almost twice the $1.65 billion in stock Google paid for YouTube last year.
Google has built a lucrative business in selling small text ads that appear alongside its search results and on other Web sites. New York-based DoubleClick is the leader among companies that specialize in placing graphical and video
Don Harrison, the senior corporate counsel for Google, said in a statement Monday that the acquisition "poses no risk to competition and should be approved."
"Numerous independent analysts and academics have determined after looking at this acquisition that the online advertising industry is a dynamic and evolving space – as evidenced by a number of recently announced acquisitions – and that rich competition in this industry will bring more relevant ads to consumers and more choices for advertisers and Web site publishers," Harrison said.
Jeff Chester, executive director of the Center for Digital Democracy, said that decisions made now about the structure of the online advertising industry could have lasting effects on data collection and personal privacy on the Internet, especially if control rests with a “few powerful gatekeepers” led by Google.
DoubleClick had been the target of a fierce bidding war between Microsoft and Google. Though Google commands the bulk of the online advertising search market, the addition of DoubleClick’s technology and client network would further its efforts to branch out beyond its core ad offerings.
To the extent that a reduction in competition could make it more difficult to protect privacy, it could be a consideration, said Andrew I. Gavil, a law professor at Howard University. But it would have to be linked to competition. Strictly speaking, privacy is not an antitrust issue.
In the complaint, the groups noted that Google collects the search histories of its users, while DoubleClick tracks what Web sites people visit. DoubleClick’s technology displays ads on Web sites, helps Web sites and advertisers maximize their revenue and monitors ad campaigns.
The company has been linked to "spyware" because its Internet browser cookies record which ads users selected and view while on Web sites. DoubleClick — whose customers include Time Warner Inc.’s AOL and News Corp.’s social-networking site MySpace — says its ad-serving tags are different from spyware.
The merger, according to their complaint, would "give one company access to more information about the Internet activities of consumers than any other company in the world."
Among the competitors that had called for an antitrust review were Microsoft, which had lost out in the bidding for DoubleClick, and AT&T, which distributes services over the Internet like digital television.
However, Google turned over basic information about the planned purchase to regulators after announcing the deal. Spokesman Adam Kovacevich said the company would soon turn over additional information sought by the FTC as part of its review.
Earlier this month, Google Chairman Eric Schmidt said the company would clear all the necessary regulatory hurdles to complete the cash deal for DoubleClick was expected to close by the end of the year.
"We are confident that upon further review the F.T.C. will conclude that this acquisition poses no risk to competition and should be approved," said Harrison, a senior corporate counsel for Google.