No intervention by Australia's competition watchdog in Google buyout

Google to control 70 percent of the search-based advertising market

The Australian Competition and Consumer Commission (ACCC) today released a statement confirming it will not intervene in Google's US$3.1 billion acquisition of DoubleClick.

ACCC chairman, Graeme Samuel, said the watchdog carefully considered the likely effects of the proposed transaction on the Australian online advertisiing industry.

Google sells advertising space on its own Web sites as well as on third parly sites and owns the leading Internet search engine in Australia. Meanwhile, DoubleClick develops software that allows publishers and advertisers to display, or 'serve', graphical advertisements onto Web sites.

"The ACCC carefully considered the likely effects of the proposed transaction on the Australian online advertising industry," Samuel said.

"A key locus of the ACCC's investigation was whether the combination of Google's network of Web site publishers and DoubleClick's ad serving capabilities would enable the merged entity to increase the cost of ad serving to Web site publishers and advertisers.

"In reaching its decision, the ACCC noted that Google and DoubleClick are not close competitors in the provision of ad serving. In addition, the ACCC also took into account the presence of other competitors in this market that would be likely to constrain the merged entity post-merger."

In this context, Samuel said the ACCC found that the merger was unlikely to result in a substantial lessening of competition in an Australian market.

A full assessment of its impact will be available in coming months at www.accc.gov.au/mergers/.

Since the merger was first proposed in April 2007 there has been a lot of opposition to the deal, particularly from Microsoft claiming it would create a giant that could control a huge portion of online advertising.

Microsoft General Counsel Brad Smith argued that the marriage of Google and DoubleClick will allow Google to control 70 percent of the search-based advertising market and 80 percent of the online display advertising market. He called on regulators to reject the deal on antitrust grounds.

Just over a month after Google announced plans to acquire DoubleClick for US$3.1 billion, Microsoft announced that it would acquire aQuantive, a digital marketing services agency, for $6 billion.

Marc Rotenberg, president of the Electronic Privacy Information Centre, voiced concerns that the merger will have a huge effect on consumer privacy. The combined company would control a huge database of customer data, Rotenberg said.

However, regulators in the US, Canada, Australia and Europe have not taken any formal action to stop the deal.

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