The Federal Trade Commission said it
unanimously decided to approve Google’s AdMob deal mainly because of
Apple’s recent push into the $600 million mobile advertising market in
the U.S. The ruling closes a six-month antitrust investigation.

The
emergence of another deep-pocketed competitor eased the FTC’s concerns
that Google would be able to use AdMob as a springboard for extending
its dominance into the nascent field of wireless devices.

"The
presence of Apple made it for hard for the commission to construct a
merger challenge that it felt it could win," said Jeff Shinder, a New
York antitrust lawyer who is a former special counsel to the FTC.

Apple’s
role in persuading the government to sign off the deal is a weird twist
because the maker of the iPhone and iPad was negotiating to buy AdMob
before Google swooped in with a higher bid last November.

Shortly
after the AdMob snub, Apple bought a smaller mobile ad service, Quattro
Wireless, that is providing the technology for the iAd platform that
persuaded the FTC to sign off on Google’s deal.

Now that it has
regulators’ blessing, Google said it will take over AdMob within the
next few weeks.

This marks the second time in three years that the
FTC has launched an extensive investigation into a Google acquisition
aimed at expanding its share of the digital ad market. The FTC spent a
year examining Google’s $3.2 billion acquisition of online ad service
DoubleClick Inc. before approving it in March 2008.

The government
scrutiny reflects the widening worries about the power Google has
amassed over the past decade as its search engine became the Internet’s
main gateway and its advertising network became the Web’s richest gold
mine.

"How this possibly can be construed as promoting competition
is incomprehensible," said John Simpson of Consumer Watchdog, a
strident Google critic. "What it demonstrates is Google’s clout in
Washington."

Google has ramped up its government lobbying efforts
in part to convince regulators and lawmakers that it faces robust
competition from a phalanx of fierce rivals that include Microsoft
Corp., Yahoo Inc., Facebook and its one-time ally, Apple.

Google
had strongly indicated that it would have gone to court had the FTC
tried to block the AdMob deal.

The company believes advertising on
mobile devices eventually will be as lucrative as marketing on computer
screens, and it considers AdMob to be a key piece in its strategy to
make more money from people on the go.

AdMob, launched four years
ago by Omar Hamoui, runs a network that delivers targeted advertising to
websites and to online applications tailored for smart phones,
including Apple’s iPhone and devices powered by Google’s Android
software.

The FTC had feared that a combined Google-AdMob would
thwart competition and possibly have a ripple effect on the mobile phone
applications that rely on ads.

Combined, Google and AdMob will
have a 21 percent share of the U.S. mobile ad market followed by
Millennial Media at 12 percent, according to the most recent statistics
from International Data Corp. Yahoo is next at 10 percent followed by
Microsoft at 8 percent and Quattro Wireless at 7 percent.

U.S.
spending on mobile advertising is expected to approach $600 million this
year and increase to nearly $1.6 billion in 2013, according to
eMarketer. That’s still smaller than spending for online ads delivered
to laptops and desktops, but growth there is expected to be slower — to
more than $33 billion by 2013, from a projected $25.1 billion this year.

The
big question now is whether Google and Apple will be able to leverage
their advertising networks and widely used platforms for mobile
applications to create an effective duopoly in the market.

Industry
analysts and mobile ad executives are skeptical and predict that other
major companies will try to muscle into the market with acquisitions of
their own. Other mobile ad services still in play include JumpTap,
GreyStripe, Mojiva and Mobclix.

Microsoft and even some magazine
publishers developing applications for mobile devices may emerge as
buyers, said eMarketer analyst Noah Elkin. "A lot of molds have been
broken in terms of who might try to get into this space," Elkin said.
"Everyone wants access to this mobile audience."

As Google puts
one regulatory investigation behind it, Apple could be wrestling with
one of its own.

Apple is also facing increased regulatory scrutiny
in Washington. Officials at the FTC and the Justice Department are
currently sorting out which agency will examine whether the company is
violating antitrust rules by requiring software developers to use Apple
programming tools to create applications for the iPhone and iPad.

Tessler reported from Washington.