EU to Review Google-DoubleClick Merger as Microsoft Meddles

Google has formally asked the European Commission to review itsacquisition of interactive advertising firm DoubleClick. The next few weeks will be critical, as regulators and lawmakers on both sides ofthe Atlantic contemplate how — or whether — the merger should move forward.

The EC on Monday indicated that it had received Google’srequest and would decide by late next month whether to give the greenlight to its proposed US$3.1 billion acquisition of DoubleClick.

The agency’s antitrust staff will decide by Oct. 26 whether to request more information on the proposed takeover. If it does not, the merger will get the go-ahead.

“We asked the European Commission to look at the proposedacquisition,” said Julia Holtz, the search giant’s lead antitrustcounsel. “We believe this deal is positive for both users andadvertisers, and fosters competition.”

As a result of that move and related events in the United States, thenext few weeks may be critical in determining if the deal goes aheadas proposed or if regulators demand some concessions. One possibilityis that regulators will demand stricter privacy policies to helpaddress some of the concerns about user data storage and sharing thatwould be possible after the merger.

Watching the Calendar

Later this week, a U.S. Senate Judiciary subcommittee in charge ofantitrust issues will take up the deal. The committee has said thehearing will focus on both the competitive implications of the mergerand the potential impact on consumer privacy.

Among the witnesses at that hearingwill be Google’s chief legal officer and Microsoft’s chief counsel, according to a listdistributed by the subcommittee chairman, Sen. Herb Kohl, D-Wis. Privacy experts are also slated to testify.

Ahead of that hearing and the Federal TradeCommission’s final decision, Microsoft reportedly has been lobbying hard forrestrictions to be placed on the Google-DoubleClick deal.

Microsoft, whose own interactive advertising buy — the $6 billion purchase ofaQuantive — moved through antitrust review in short order over thesummer, has hired a public relations firm to push for tough reviewof the deal by lawmakers and regulators, the The Wall Street Journal reported Monday.

The firm, Burson-Marsteller, has been suggesting reporters pursue stories about theprivacy implications of the deal in the U.S., according to the paper. In Europe, it reportedlyis urging other Internet companies to visit thewww.i-comp.org Website and join a call for tough review of the competitive fallout thatmight occur.

Many Voices

Regulators are considering varying points of view, including concernsraised by privacy groups about the merger. DoubleClick is no strangerto privacy concerns; its early use of cookies to track usermovements online drew the ire of privacy advocates a decade ago. TheElectronic Privacy Information Center (EPIC) has urged the FTC toapprove the deal only if Google agrees to abide by limitations on how it usesand stores personal data about Web users.

EPIC has successfully lobbied the FTC into action on Web privacy in the past, Executive Director Marc Rotenberg pointed out, notably in response to a complaint against Microsoft’s Passport electronic walletprogram.

The sheer volume of the data and the number of consumers impacted inthe Google case make it unique, he said, noting that Googleis expected to propose a global standard for Internet privacy.

“You’re dealing with the largest search company and the largest[online] advertising company,” Rotenberg told the E-Commerce Times. “Neitherhas a particularly [strong] track record when it comes to protecting onlineprivacy. A combination would pose a substantial threat to the privacyinterests of Internet users.”

For Google, the fact that the process has dragged on — with the FTCissuing a second request for information and lawmakers now taking upthe issue in the public spotlight — increases the odds that it willhave to make concessions, Yankee Group analyst Laura DiDio told the E-Commerce Times.

At the same time, Google may be looking to move the European processforward in the hope that a green light there would provide some assurance for regulators in the U.S.

“This merger is difficult for regulators because the market is justbeginning to take shape,” DiDio said. “The impacts of what happenstoday may not be felt for several years — and that’s inherentlydifficult to predict and even harder to regulate.”

Google has begun its own public relations effort in support of themerger, using its new policy blog to highlight its benefits, along with the steps it is taking to protect consumer privacy.

“Advertising is information, and relevant advertising is information that is useful to consumers,” Policy Counsel Pablo Chavez wrote in the blog recently, reiterating comments he made to the FTC ahead of aplanned Town Hall forum on the topic of privacy slated for earlyNovember. “We think our acquisition of DoubleClick provides anopportunity for us to bolster privacy even further.”