December 21, 2007 - The Federal Trade Commission ruled on Dec. 20 that it would not block Google's (GOOG) proposed $3.1 billion acquisition of leading online ad-serving and tracking firm DoubleClick.

The 4-1 decision in Google's favor marked a major win for the Web search Goliath, which is battling to expand its considerable share of the $30 billion online advertising market beyond tiny text ads related to Web queries.

But Google can't claim victory yet. The European Union's antitrust commission still needs to sign off on the merger before Google can begin incorporating DoubleClick into its business. That may not happen without Google agreeing to certain conditions, if at all.

Already, the EU has raised concerns about its impact on consumer privacy. "This is round one of a two-round battle," says Jeff Chester, executive director of the Center for Digital Democracy (CDD), a nonprofit public interest group that opposed the merger. "The EU can kill the deal, there is no question about it."

The FTC said in its decision that it could only consider privacy concerns as they relate to marketplace competition. But it did issue a separate statement with some recommendations concerning online customer data collection and privacy.

The Personal Business of Ad Placement
Google has faced strong opposition to its online advertising ambitions since it announced plans to acquire DoubleClick in April (BusinessWeek.com, 4/14/07). Competitors for online ad dollars, such as Microsoft (MSFT), argue the merger will enable Google to effectively control the market.

 Ads placed beside Web search results account for more than 40% of the dollars spent online, and Google controls more than two-thirds of that market, according to eMarketer. Much of the remaining online ad dollars go to display ads, the poster-like banners—DoubleClick's forte—that run on most Web sites.

Online ads are priced based on how well they are matched to the target consumer. Google collects data on searches performed by individual computers, and DoubleClick records information about the computers that visit the Web pages in its network. The more data they collect, the better they can match a marketer's ad to a potentially interested customer, and the higher the premium they can charge on the ad.
 
Increased Competition
Recent announcements by Google's chief competitors support this argument. On Dec. 19, Microsoft—one of the few to challenge Google's merger before the FTC—announced a $500 million, five-year advertising deal to place ads on Viacom's (VIA) network of popular Web sites, including MTV.com. Microsoft will also be able to sell ad space on Viacom pages that are not in a premium position, based on the data it has about visitors to Viacom's sites. 

Full Story: http://www.businessweek.com/technology/content/dec2007/tc20071220_235248.htm?chan=top+news_top+news+index_top+story

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