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FTC Continues Eyeing Google’s AdMob

Posted  May 14, 2010

The Federal Trade Commission will extend by up to two weeks its decision on whether to formally investigate Google for its acquisition of mobile web-advertising startup AdMob.

According to the New York Times, the federal antitrust enforcer initially planned to make a decision on Monday, but has requested the extra time in part to consider whether Apple’s own entry into mobile advertising affects antitrust concerns.  According to the Times, many in the FTC favor action against Google, and a decision may come as soon as this Friday.

The concern stems from whether Google, already the largest seller of advertisements on the traditional internet, will use its acquisition of AdMob to try to dominate the market for advertisements on cell phones and other mobile devices.  That area of advertising is young and has many competitors, but is growing at a potentially explosive rate.

Google announced its acquisition of AdMob last November, but is still waiting for the green light from the FTC.  At the same time, Apple has also entered the market.  First, it announced in January that it was buying Quattro, a competitor to AdMob.  Second, Apple recently announced its creation of its iAd program, which will be the exclusive means of placing advertisements in applications that run on its wildly popular iPhones, iPods, and iPads.  To give a sense of Apple’s own popularity, the company has sold approximately one million iPads in just one month.  The FTC seems to be looking at the possibility that Apple’s own success, or potential success, in the mobile advertising space will counteract any advantage that Google might otherwise have.

Ultimately, whether the FTC investigates may hinge on whether the FTC decides to recognize a specialized market for advertising on mobile devices.  Google argues that the mobile advertising space is “fragmented,” and that the area is too new to recognize as a separate market from standard web advertising.  The FTC, on the other hand, is likely concerned that Google can use its large scale in traditional web advertising to convince advertisers to place mobile ads with Google and AdMob.  The FTC may also be concerned that Google can use network effects to its advantage, since having more advertisers allows it to fine-tune its formulas for selling and placing ads, which then lets it sell still more ads.

Tagged in: Antitrust Enforcement,