The European Commission has more stringent competition rules
than US authorities but it has said that the merger is permissible
because Google and DoubleClick are not direct competitors and there
is enough competition in the market for online advertising
services.
Google confirmed that the deal has now been completed.
"The Commission's in-depth market 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," said the Commission.
"Even if DoubleClick could become an effective competitor in
online intermediation services, it is likely that other competitors
would continue to exert sufficient competitive pressure after the
merger," it said. "The Commission therefore concluded that the
elimination of DoubleClick as a potential competitor would not have
an adverse impact on competition in the online intermediation
advertising services market."
Google's announcement of the completion of the deal was almost
immediate. "We are thrilled that our acquisition of DoubleClick has
closed," said Eric Schmidt, Google's chief executive. "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."
The Commission had been conducting an investigation sine
November last year into whether DoubleClick's share of the market
for serving display ads on websites and Google's dominance in
keyword advertising meant that the deal would stifle
competition.
Microsoft had opposed the deal, claiming that it would create
too powerful an entity in the online advertising market. "This
proposed acquisition raises serious competition and privacy
concerns," the company's general counsel Brad Smith told Reuters
last year. "We think this merger deserves close scrutiny from
regulatory authorities to ensure a competitive online advertising
market."
The Commission, though, said that the existence of Microsoft was
one of the reasons that the merger passed its tests.
"The Commission found that the merged entity would not have the
ability to engage in strategies aimed at marginalising 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,"
said the Commission. "The market investigation also found that the
merged entity would not have the incentive to close off access for
competitors in the ad serving market, mainly because such
strategies would be unlikely to be profitable."
Google agreed to buy DoubleClick in April 2007 for $3.1 billion,
reportedly outbidding Microsoft for control of the company.
The Commission pointed out that its investigation was purely one
of economic competition and did not take account of the potential
privacy implications of the deal. Privacy advocates are worried
that the merged company will have a huge store of web users'
surfing habits.
The deal has been opposed by some privacy officials. The Data
Protection Commissioner of the German state of Shleswig-Holstein
Thilo Weichert wrote to the Commission last October, expressing his
view that the merger would allow the two halves of the combined
company to merge their databases in contravention of EU privacy
law.
The collective body of Europe's data protection officials, the
Article 29 Working Party, is expected to report next month on the
results of its investigation into the privacy practices of search
engine companies.
