Pixel Envy

Written by Nick Heer.

Thirteen Years Too Late, Google’s Acquisition of DoubleClick Is Being Scrutinized

Steve Lohr, New York Times:

Google’s ad business is now a focus of wide-ranging investigations by the Justice Department and state attorneys general. The scrutiny includes whether the company choked off competitors, or shortchanged advertisers and publishers, and how it assembled its ad empire, including DoubleClick, an ad technology company and marketplace.

[…]

While DoubleClick was its largest deal by far, Google built up its ad technology business with a string of acquisitions. It bought start-ups that made software for publishers, advertisers and mobile ads, including AdMob in 2009, Invite Media in 2010 and AdMeld in 2011.

Those building blocks and its in-house innovations have given Google a strong presence in every step of buying and selling online ads.

“Google has put it all together,” said Jeffrey Rayport, an online marketing expert at the Harvard Business School. “Google is the market under one roof.”

Google may have been a lot smaller in 2007, when it bought DoubleClick, but the anticompetitive likelihood of this acquisition was obvious. From a contemporary paper by the American Antitrust Institute (PDF):

DoubleClick’s advertising exchange is a recent innovation and its current market share is probably negligible. However, given its leading position in providing ad-serving services to advertisers and publishers, it is arguably poised to capture significant market share in the near future. Under the Department of Justice/Federal Trade Commission Horizontal Merger Guidelines, it is critical that the agencies look at likely future market shares, not merely current shares, particularly given that the transaction appears premised on DoubleClick’s future market potential. DoubleClick’s anticipated growth, if it comes partially at the expense of AdSense, would reduce the current level of concentration in the market. In contrast, the combination with Google would increase concentration compared to what it otherwise would be. The result may be higher intermediation costs for publishers.

Market consolidation was not the only concern people had about the DoubleClick acquisition. Stefanie Olsen in a 2007 CNet article:

How will the search-advertising powerhouse treat the massive amounts of data it already stores on people’s search histories, once it also has at its disposal a storehouse of data on people’s surfing habits from DoubleClick, the No. 1 digital ad-serving company?

Specifically, will Google combine the two data systems to map not only what someone searches for, but also which sites they visit, videos they watch and ads they click across the Web in order to better target marketers’ promotions?

[…]

Google says such fears are unwarranted. (The deal is expected to close later this year.) When asked about such worries Tuesday [Eric Schmidt] replied that the company recognizes the importance of privacy and making people comfortable with its practices. He speculated that Google could create an opt-in system for consumers or maintain separate data storehouses.

How quaint.

Just three years later, Google began merging user data across products — excluding DoubleClick — and, six years after that, decided to stop pretending DoubleClick was a separate company and began merging everything into a single personally-identifiable web tracking behemoth. This is yet another instance of a company making promises it has no intention of keeping as it pushes for an acquisition that, in a pre-Chicago School era, would have been illegal.