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Senator Kohl Leery Of Google Gobbling Up AdMob

Posted  April 12, 2010

Google’s informal motto is “Don’t be evil.”  Whether or not it has breached that principle, the internet search and advertising giant may be about to run afoul of antitrust law, according to the Senate’s head antitrust watchdog.

On Tuesday, Senator Herb Kohl, chair of the antitrust subcommittee of the Senate Judiciary Committee, asked the Federal Trade Commission to take a closer look at Google’s proposed acquisition of AdMob, which provides advertisements on mobile phones.

According to Senator Kohl’s letter, “[c]ritics of this transaction worry that this deal will allow Google to merge with one of its biggest rival mobile advertising competitors.”  While Senator Kohl states that he has not concluded that the merger will create “dominance or would cause substantial harm to competition,” he nonetheless asks the FTC to “scrutinize this deal very closely,” and to ensure that any approval of the merger “will have sufficient safeguards to protect consumers’ privacy.”

Google and AdMob, on the other hand, have stated that “experts have called mobile advertising a ‘very fragmented’ space, in which ‘no ad network is dominant’ and ‘no one really knows what ad network is biggest.’”  For instance, Apple has launched its own advertising platform – iAd – which will serve its omnipresent iPhone and its new iPad.

Given Apple’s prominence in the market and proven ability to exploit its consumer friendly hardware to gain advantages in complementary industries, the FTC will have to consider this development in its analysis of the Google/AdMob.  Whether that will change the ultimate analysis is hard to tell at this point. In other words, as even Senator Kohl’s letter acknowledges, the market may be too “nascent” to justify blocking the merger.

The FTC has apparently already assembled a team to investigate Google’s acquisition of AdMob.  Senator Kohl’s letter at the very least adds pressure on those lawyers to take a hard look at the merger.

Tagged in: Antitrust Enforcement,