* Sees Google display business worth up to $20 bln
* Will make further acquisitions
By Kate Holton
CANNES, France, June 22 Google will buy
more companies to boost its presence in the booming online
display ad sector in a challenge to Facebook, even as European
regulators examine its dominant web search position.
Speaking to a small group of reporters on the sidelines of
the Cannes Lions advertising festival, Executive Chairman Eric
Schmidt said the group would continue to snap up companies that
specialised in handling display ads such as banners and video.
"It would be good to have more diversified revenue," Eric
Schmidt said, just days after Google announced plans to buy
AdMeld to grab a larger slice of the market for graphical
"I would argue that we're doing really well there. We
started off with largely text ads, and now we have this display
business which is going to end up being a $10 billion, $20
billion kind of business. It will be very large."
The vast majority of Google's revenue, which totalled
roughly $29 billion in 2010, comes from the small ads that
appear alongside its search results.
But some analysts have suggested that Google needs to
diversify its business with products such as social networking
tools to prevent advertisers moving over to the social network
According to a report released earlier this week by research
firm eMarketer, Facebook will displace Yahoo Inc to
take the biggest slice of online display ad dollars in 2011.
With that in mind, Google has engaged in a buying spree of
technology and engineering talent to bolster initiatives outside
of the search business, including in mobile advertising.
Schmidt said the display business had taken time to develop
but said it would now look to make further acquisitions as
publishers and advertisers helped it to understand which new
services were required.
"There's not a list of targeted acquisitions," he said. "As
the strategy develops it will become clear what the customer
needs that we have not been able to build ourselves."
The spending spree, albeit in a different sector, comes as
regulators from the European Commission examine Google and its
conduct in the search market following a complaint from
Microsoft Corp that it systematically thwarts Internet
Schmidt said he had met with the Commission a "bunch of
times" and said relations were cordial, though he did not know
how long the investigation would take.
(Reporting by Kate Holton; Editing by Will Waterman)