UPDATE 2-Google says AdMob deal gets FTC review

Wed Dec 23, 2009 6:22pm EST

* Google says received FTC "second request" on AdMob deal

* Says deal won't close "right away"

* Co. confident FTC will find deal keeps space competitive (Adds comments from analyst, attorney and FTC)

By Alexei Oreskovic

SAN FRANCISCO, Dec 23 (Reuters) - Google Inc (GOOG.O) said the U.S. government is seeking more information about the competitive impact of its proposed $750 million purchase of AdMob on the nascent market for mobile advertising.

The world's No. 1 Internet search engine said in a post on its company blog on Wednesday that it received a "second request" from the U.S. Federal Trade Commission this week.

The FTC is "asking for more information so that they can continue to review the deal," read the post, written by Google Product Manager Paul Feng.

"While this means we won't be closing right away, we're confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes," the post continued.

Google announced plans to acquire AdMob in November in what would be its third most expensive purchase behind the $3.1 billion acquisition of DoubleClick and the $1.65 billion purchase of YouTube.

Google said at the time that it expected the deal to close in the next several months.

Daniel Asimow, an antitrust partner at San Francisco law firm Howard Rice Nemerovski Canady Falk & Rabkin, said second information requests are infrequent.

"It does mean that the government has some concerns about the transaction," Asimow said, but warned against reading too much into the move.

The FTC only demands a second request from about 3 percent of the mergers that it reviews, an agency spokesman said.

The agency makes such request when it needs more information after an initial 30-day review to decide if a transaction would substantially lessen competition.

Google representatives declined further comment.

The company has experienced increasing regulatory scrutiny as it has grown. The U.S. Department of Justice in September challenged Google's settlement with book publishers and authors groups that would allow the search giant to sell digital copies of the published works.

Privately held AdMob makes technology for delivering display ads on mobile phones and maintains a network that allows advertisers to place display ads on mobile Web sites and directly within specialized smartphone applications.

With consumers increasingly accessing the Internet from cell phones, Google has stepped up efforts to expand into the mobile market.

The company's Android software for smartphones is available on more than a dozen handsets from different vendors, making Google one of the companies best-positioned to challenge Apple Inc's (AAPL.O) popular iPhone, say analysts.

Google generates the majority of its revenue, which totaled roughly $22 billion in 2008, from selling ads that appear alongside its Internet search results.

But the company also owns key technology for serving ads on Web sites through its DoubleClick business.

Aaron Kessler, an analyst at Kaufman Brothers, speculated that regulators could be interested in how much of the ad serving market - both for traditional online ads and for mobile ads delivered to cell phones - Google would control by acquiring AdMob.

With AdMob and DoubleClick under its wings, Google would also own advertising exchanges - which allow marketers to buy ad space in bulk - for both the online and mobile markets, though Google noted in its blog post on Wednesday that there are more than a dozen mobile ad networks in existence.

Google said it has been in discussions with the FTC over the past few weeks and that it will work closely and cooperate with the commission as it continues its review of the deal.

Shares of Google closed Wednesday up $10.56 at $611.68 on Nasdaq. (Additional reporting by David Lawsky; Editing by Richard Chang, Leslie Gevirtz)