The Federal Trade Commission just announced its approval of the $750 million acquisition of mobile ad network by Google. From the release which is embedded below: “The Federal Trade Commission has closed its investigation of Google’s proposed acquisition of mobile advertising network company AdMob after thoroughly reviewing the deal and concluding that it is unlikely to harm competition in the emerging market for mobile advertising networks.” Google was quick to put up a blog post of their own, praising the FTC’s decision. You can also read AdMob’s statement here.
The FTC has taken a particularly close look at the deal on antitrust grounds and even extended the timeline for the investigation. Google on the other hand, has made a significant lobbying effort for approval.
In its statement, the FTC says that the recent acquisition of mobile ad network Quattro Wireless by Apple shows that the AdMob deal wouldn’t completely eliminate competitors in the space, stating that “Apple is poised to become a strong competitor in the mobile advertising market.” We made this exact same argument a few weeks ago.
As part of its investigation, the FTC reached out to developers of mobile applications to get their thoughts. These developers and even some Admob competitors, publicly said that they support the deal, and some of them believed that the people involved in the investigation were either unqualified or had an anti-Google agenda.
Clearly the process has shown that the FTC seems to have a bone to pick with Google. If anything, Google is on notice that the FTC is willing to challenge any large deals the search giant proposes.
The Federal Trade Commission has closed its investigation of Google’s proposed acquisition of mobile advertising network company AdMob after thoroughly reviewing the deal and concluding that it is unlikely to harm competition in the emerging market for mobile advertising networks.
In a statement issued today, the Commission said that although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market, most notably a move by Apple Computer Inc. – the maker of the iPhone – to launch its own, competing mobile ad network. In addition, a number of firms appear to be developing or acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android, and these firms would have a strong incentive to facilitate competition among mobile advertising networks.
“As a result of Apple’s entry (into the market), AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the Commission’s statement explains.
The Commission stressed that mergers in fast-growing new markets like mobile advertising should get the same level of antitrust scrutiny as those in other markets. The statement goes on to note that, “Though we have determined not to take action today, the Commission will continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers.”
Mobile ad networks, such as those provided by Google and AdMob, sell advertising space for mobile publishers, who create applications and content for websites configured for mobile devices, primarily Apple’s iPhone and devices that run Google’s Android operating system. By “monetizing” mobile publishers’ content through the sale of advertising space, mobile ad networks play a vital role in fueling the rapid expansion of mobile applications and Internet content.
According to the FTC’s statement, evidence gathered by the agency raised important questions about the transaction. Google and AdMob have competed head-to-head for the past few years, with a notable increase in intensity during the past year. This competition has spurred innovation and allowed mobile publishers to keep a large share of the revenue generated from the sale of their ad space. The companies also have economies of scale that give them a major advantage over smaller rivals in the business, the statement says.
These concerns, however, were outweighed by recent evidence that Apple is poised to become a strong competitor in the mobile advertising market, the FTC’s statement says. Apple recently acquired Quattro Wireless and used it to launch its own iAd service. In addition, Apple can leverage its close relationships with application developers and users, its access to a large amount of proprietary user data, and its ownership of iPhone software development tools and control over the iPhone developers’ license agreement.
The Commission vote to close the investigation was 5-0.