The Brussels-based European Commission, the antitrust authority of the European Union, approved Mountain  View, California-based Internet search leader Google's $3.1 billion purchase of online advertising company DoubleClick, saying in an announcement Tuesday that the merger will not hurt competition for online ads. The decision comes some 11 months after E.U. regulators began in-depth investigations into Google's proposed purchase of DoubleClick, and nearly three months after the firms received approval from Department of Justice antitrust authorities in the United States. Google "Thrilled" With EU Decision In approving Google's acquisition of DoubleClick the Commission determined that "the elimination of  DoubleClick as a potential competitor would not have an adverse impact on competition in the online intermediation advertising services market," the Commission said Tuesday, and added that it believes the merger "would not significantly impede effective competition." Google said the Commission's approval and its purchase of DoubleClick will ultimately help online publishers, consumers, and advertisers. "We are thrilled that our acquisition of DoubleClick has closed," said Eric Schmidt, Google's chairman and chief executive, in a statement. Sizable Display Advertising Addition The addition of DoubleClick is expected to help Google expand its display advertising business. "With  DoubleClick, Google now has the leading display ad platform, which will enable us to rapidly bring to market advances in technology and infrastructure that will dramatically improve the effectiveness, measurability and performance of digital media for publishers, advertisers and agencies, while improving the relevance of advertising for users," Schmidt said Tuesday. Advertisers and privacy advocates had tried to stop the acquisition, which they claimed would give Google excessive control in the online advertising space, claims shared by firms such as Web pioneer Yahoo and Microsoft. The European Commission antitrust arm of the 27-country European Union said such claims were unfounded, although it noted that its decision was based solely on the economic implications of the deal. Watchdog organizations such as the Electronic Privacy Information Center and the Center for Digital Democracy, concerned with personal privacy issues in both the U.S. and Europe, had sought to stop the merger, which they fear would place vast amounts of personal information in the hands of a single firm holding top positions in both Internet search and advertising, a situation seen as potentially dangerous by the groups. Harmful Effects Unlikely in Merger The Commission said its "investigation found that Google and DoubleClick were not exerting major competitive constraints on each other's activities and could, therefore, not be considered as competitors at the moment," and concluded in its Tuesday statement that a Google acquisition of DoubleClick "would be unlikely to have harmful effects on consumers, either in ad serving or in intermediation in online advertising markets." The Commission determined that publishers and advertisers would have "credible ad serving" alternatives in firms such as Microsoft, AOL and Yahoo. "The merged entity would not have the ability to engage in strategies aimed at marginalizing Google's competitors, mainly because of the presence of credible ad serving alternatives to which customers [...] can switch, in particular vertically integrated companies such as Microsoft, Yahoo! and AOL," the Commission said in its decision. Personal Privacy Aspects Not Examined Tuesday's decision did not take into account personal privacy implications surrounding the merger, issues being examined by separate European privacy regulators in a general inquiry into whether search engines and their data privacy terms - even those based outside of Europe - are legal under present E.U. law. The privacy regulators are expected to release their findings in April. There was one dissenting opinion (.PDF file) in the Federal Trade Commission's 4-1 decision in December 2007. Pamela Jones Harbour noted that the online advertising market may be too young to know just how the deal might affect competition or consumer privacy. "I dissent because I make alternative predictions about where this market is heading, and the transformational role the combined Google/DoubleClick will play if the proposed acquisition is consummated," Harbour wrote in the dissenting opinion. DoubleClick, which has some 1,500 employees, uses technology that allows its clients to place and track targeted ads on Web pages, and has been a favorite of smaller companies. Both video and graphical ads are used in the DoubleClick system, and the privately held New York-based company offers both types to roughly 2,000 clients including advertisers, Web publishers, and advertising agencies. Google Gets E.U. Go-Ahead For DoubleClick Merger Last year two of Google's rivals purchased companies in the online advertising industry, when Yahoo purchased Right Media Inc. for $680 million and Microsoft agreed to purchase aQuantive Inc., the Internet's largest interactive ad agency, for $6 billion. Additional deals have been make in the online advertising industry, including Yahoo's $300 million purchase of BlueLithium and Time Warner AOL's acquisition of Tacoda, all companies specializing in technology helping advertisers target ads on the Web. Google is the leading search engine in most European countries by a wide margin, with market shares topping 90 percent in some nations. In the U.S. in January, Google extending its leading share of the search market to 58.5 percent, more than the four other top search engine sites combined, according to figures from Web traffic analysis company comScore. A SearchEngineWorld chart below illustrates the January 2008 figures.  Google Plans To Cut Jobs Google said that it has been limited in the planning it could legally do before it received E.U. approval, and would now begin the integration process, including unspecified layoffs. "An immediate task we'll undertake over the next few weeks is matching and aligning DoubleClick employees with our organizational plan for the business," Schmidt wrote in a blog post Tuesday. "As with most mergers, there may be reductions in headcount. We expect these to take place in the U.S. and possibly in other regions as well," Schmidt added. During afternoon trading shares of Google stock were up 6.34 percent, or $26.22, to close at $439.84. Related Links:
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9:57 pm on Mar. 11, 2008 (utc 0)