Google closes DoubleClick merger after EU approval

BRUSSELS Tue Mar 11, 2008 3:04pm EDT

1 of 2. In this file photo a woman walks past a banner of Google inside a campus as Lee Kai-fu, vice-president of Google Inc. and co-president of Google China, holds a talk at the University of Hong Kong September 14, 2006. Google Inc plans to make an unspecified number of job cuts at DoubleClick Inc following the closing of its $3.1 billion acquisition of the advertising technology company, Google said on Tuesday.

Credit: Reuters/Bobby Yip

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BRUSSELS (Reuters) - Google Inc closed its $3.1 billion acquisition of online ad delivery company DoubleClick Inc on Tuesday, just hours after the deal won unconditional approval from the European Commission.

The approval came despite objections from rivals and privacy advocates and followed an in-depth investigation by European competition officials. The merger, announced a year ago, was given a go-ahead by U.S. antitrust authorities late last year.

The European Commission, the European Union's executive arm, said the companies operate in different parts of the online advertising world and their deal was not a marriage of rivals.

"Google and DoubleClick were not exerting major competitive constraints on each other's activities and could, therefore, not be considered as competitors at the moment," it said.

Google has by far the strongest position in Web searching in Europe. That gives it an edge on the simple ads it sells, which appear on its search pages.

DoubleClick deals with fancy display ads that it delivers to many kinds of Web sites.

DoubleClick supplies the technology used in what is known as "ad serving," which allows advertisers to target potential customer and measure how well their ads are received. Its services are a boon to Web site owners who fill the blank space on Web pages with brand adverting delivered by DoubleClick.

Ad serving funnels the advertising of clients to one of several ad networks, such as Google's AdSense, which act as auctioneers connecting buyers and sellers of ads and ad space.

The Google-DoubleClick deal drew opposition from rivals such as Microsoft Corp and Yahoo Inc.

The European Commission said once Google and DoubleClick combine, they will still be unable to marginalize other ad servers that have become attractive to big technology players.

The online ad industry rapidly consolidated last year. Microsoft bought aQuantive for $6 billion, Yahoo bought BlueLithium for $300 million, and Time Warner Inc's AOL unit bought Tacoda for an undisclosed amount.

Privacy advocates complained that the Google-DoubleClick deal would allow the companies to combine their different methods of gathering information about the habits of Web surfers.

One opponent characterized the gathering of information as a form of market power -- the ability of a company to raise prices or damage competitors.

The European Commission's statement sought to play down the concerns, saying the deal was unlikely to have harmful effects on consumers, at least in the markets it considered.

The commission and the U.S. Federal Trade Commission said privacy was outside the scope of a competition review. The commission's statement on Tuesday had nothing to say about privacy.

One privacy advocate, the Center for Digital Democracy in Washington, said the FTC and the European Commission must think about the Web in a different way.

"U.S. and European policymakers must reform the antitrust process to reflect the realities of the digital market era, where competition, data collection and content creation are seamlessly intertwined," it said in a statement.

(Additional reporting by Eric Auchard in San Francisco; Editing by William Schomberg, Quentin Bryar and John Wallace)

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