San Francisco, CA — Two consumer groups called on the Federal Trade Commission to block Google Inc.’s planned $750 million acquisition of mobile advertising company AdMob, arguing the deal undermines competition in what could become the critical billboard space of the digital age.
In a joint letter to the FTC on Monday, Consumer Watchdog and the Center for Digital Democracy argued that combining the online search giant with a company that describes itself as the "largest mobile ad network globally," would harm consumers, advertisers and developers of mobile applications.
"You put the two together and you have a juggernaut that is tying up what’s rapidly becoming the next booming market," said John Simpson of Consumer Watchdog in Los Angeles.
Google spokesman Adam Kovacevich responded that mobile advertising remains highly fragmented, with more than a dozen so called networks like AdMob. He pointed to a report by industry publication mobiThinking that concluded that no one knows which is the biggest because none disclose revenue.
"We’re confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes," Kovacevich said in a statement.
The letter to the FTC is the latest among mounting allegations that Google is leveraging its lead in search to ensure a leg up in different markets. Others have raised similar concerns with regards to Google’s efforts in books, news and, as reported by the Chronicle last week, review sites like Citysearch.
Google controls more than 65 percent of the U.S. online search market, according to comScore Inc. Estimates have put the company’s share of online advertising, which it masterfully matches to search queries, at as high as 40 percent.
Increasingly, however, consumers are navigating the Internet through smart phone applications rather than Google searches on their desktop. For Google, AdMob is one in a series of mobile initiatives designed to ensure it responds to the way consumers are altering their surfing habits. For critics of the deal, it’s anti-competitive behavior.
"Instead of acquiring dominance in this increasingly important market through legitimate competition and innovation, Google is buying its way to a pre-eminent position," reads the letter to Jon Leibowitz, chairman of the FTC.
If approved, the deal would allow Google to hike up the price for advertisers, seize a larger share of revenue from mobile software developers and amass "super data profiles" of their users that would raise "tremendous privacy issues," the consumer groups allege.
The FTC has already signaled it is scrutinizing the AdMob deal. Google said in a blog post last week that the commission sent it a rare "second request" for information as part of its review.
"It means the FTC’s staff believes there may be a competitive problem here," said Sam Miller, former antitrust division counsel for the Department of Justice.
E-mail James Temple at [email protected].