In a surprise decision, the Federal Trade
Commission said on Friday it won’t challenge Google Inc.’s pending $750
million acquisition of mobile advertising company AdMob, clearing the
way for the widely challenged deal to move forward.
The commission said in a statement the merger of what it called the
two leading mobile ad networks did raise serious antitrust issues,
noting their economies of scale grant the companies a major advantage
over smaller competitors.
But it added that recent market developments outweighed those
concerns. Specifically, it cited Apple Inc.’s acquisition of AdMob
competitor Quattro Wireless and its launch of iAd, a system to serve up
ads to its popular mobile devices, including the iPhone and iPad. The
FTC also noted efforts of other unnamed companies to build or buy smart
“In sum, the commission … lacked reason to believe that the
transaction would likely result in a substantial lessening of
competition, especially in light of marketplace developments that
occurred during the course of its investigation,” the FTC statement
The five-member commission voted unanimously to close the
investigation, contradicting the outcome predicted in many press reports
in recent weeks.
Google’s critics and competitors have argued the acquisition of AdMob
of San Mateo would hand the company far too much power over the
emerging mobile advertising market, and access to a troubling amount of
consumer behavioral data.
Scott Cleland, president of Precursor LLC, a research firm whose
customers include a number of large Google competitors, said the
decision gives the Mountain View technology giant a total monopoly over
the low and middle ends of the mobile advertising market.
“No one can compete with Google’s scale and scope,” he said, arguing
that Apple’s mobile sweet spot is primarily the high end. “It’s game
He called it strike two for the FTC, noting it also approved Google’s
purchase of online banner advertising company DoubleClick, which he
said has only further cemented the company’s hold on the broader
Internet advertising market.
John Simpson of Consumer Watchdog said the deal will undermine
competition, and could result in higher prices for advertisers and
Interpretation of data
Many believed the FTC’s decision would turn on how it interpreted
mobile advertising market share data. Estimates span the gamut,
depending on what exactly is being looked at.
Precursor research found that Google and AdMob together would control
75 percent of the mobile application display market, the area in which
But IDC looked at total mobile advertising, which would include
things like text ads, and concluded the combined market share would only
reach 25 percent. Meanwhile, IAB cast a wider net, looking at the
entire U.S. online display market, and found that Google controls just 9
percent and AdMob less than 1 percent.
Language in the FTC’s statement suggests the commission opted for the
middle option. It noted the companies “generate the most revenue among
mobile advertising networks” and said the transaction warranted
scrutiny because it “appeared likely to lead to a substantial lessening
of competition in violation” of antitrust law. But it appears Apple’s
recent plays in the space ultimately overshadowed those initial
“The commission has reason to believe that Apple quickly will become a
strong mobile advertising network competitor,” it said, noting the
company’s extensive relationships with application developers and
consumers, and the ability to deliver targeted ads based on data derived
from its devices.
Jeffrey Shinder, a manager partner at law firm Constantine Cannon in
New York and former special counsel to the FTC, said the commission
came to the right decision. Still, he stressed it needs to keep a
vigilant eye on the nascent industry.
Keep an eye on sector
“The competitive (concerns) were eviscerated by Apple,” he said. “But
I do think and hope that they will continue to watch both Google and
Apple closely – and frankly, even more so Apple – because there could be
antitrust issues in this sector going forward.”
Omar Hamoui, chief executive and founder of AdMob, said in a
statement he was “extremely pleased” with the decision. Susan Wojcicki,
vice president of product management at Google, said in a corporate
blog that the company plans to close the deal in the coming weeks.
“This benefits mobile developers and publishers who will get better
advertising solutions, marketers who will find new ways to reach
consumers, and users who will get better ads and more free content,” she
Google declined to comment beyond the prepared post.
E-mail James Temple at [email protected].