FTC's Investigation of Merger Case Study

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Doubleclick

FTC's investigation of merger

Google's acquisition of DoubleClick:

Is it monopolistic?

The Internet search company Google dominates the search marketplace to the point that to 'Google' something is synonymous with searching for information. However, maintaining its search engine is only one component of Google's business: to fund its activities, it must sell ads. As well as maintaining Google AdSense, Google recently acquired DoubleClick, which offers another venue for Google to amass advertising revenue. AdSense and DoubleClick are currently conjoined: "an online publisher can set a DoubleClick cookie to tell them what sections of their sites you are browsing. DoubleClick will then judge the type of adverts you might like to see from what you're browsing…. If the cookie is set on a website that is part of AdSense and then you browse another site using AdSense, the same information will be recorded and pooled. Over time, guesses can be made about the interests of the person using that browser" (Geary 2012).

According to its privacy policies DoubleClick cannot match such information to personally identifiable information (Geary 2012). Still, there are concerns about monopolistic competition in the online advertising market. In 2007, the FTC used its statutory authority to investigate Google's acquisition of DoubleClick under the Clayton Act. The Clayton Act states that the FTC may prohibit a merger if it is shown that it "may be substantially to lessen competition, or to tend to create a monopoly" (Statement of Federal Trade Commission concerning Google/DoubleClick, 2007, 1).

Ultimately, the applications of DoubleClick were not found to overlap with Google's other functions to a substantial degree, such as its selling of Google AdWords.

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The FTC noted: "Google, through its AdWords business, is the dominant provider of sponsored search advertising, and most of its online advertising revenue is generated by the sale of advertising space on its search engine results pages. DoubleClick does not sell sponsored search advertising. In fact, it does not currently sell any form of advertising" (Geary 2012). This FTC also noted that the market for advertising online is very diverse. "The evidence shows that, as with other ads placed through ad intermediaries, most advertisers do not consider contextually targeted ads sold through ad intermediaries to be substitutes for directly purchased display ads. Not only are these forms of advertising sold through different channels, but they serve distinct purposes" (Statement of Federal Trade Commission concerning Google/DoubleClick, 2007, 5). Furthermore,….....

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