WASHINGTON (Reuters) - The U.S. Federal Trade Commission on Thursday approved Google’s (GOOG.O) $3.1 billion purchase of DoubleClick, saying the much-criticized deal did not pose a threat to competition in Internet advertising.
The deal, which combines Google’s dominance in pay-per-click Internet advertising with DoubleClick’s market-leading position in flashier display ads, still faces scrutiny from European antitrust officials, who opened a four-month review in mid-November.
Google shares closed up $12.32, or 1.8 percent, at $689.69 on Nasdaq on Thursday.
In a 4-1 vote, the FTC ended its eight-month investigation of the transaction. “After carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition,” the commission’s majority wrote in a statement.
Google said it hoped the European Commission would reach the same conclusion. “This acquisition poses no risk to competition and will benefit consumers,” Chief Executive Eric Schmidt said in a statement.
Critics of the deal, first announced in April, had said it could give Google too much control over online advertising and threaten Internet users’ privacy.
In its statement, the FTC said it had also investigated the consumer privacy issue, but concluded that the evidence did not show the merger would pose a problem.
“We want to be clear, however, that we will closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the commission intends to act quickly,” it said.
A privacy group that opposed the deal said the FTC failed to protect Americans who use the Internet.
“By permitting Google to combine the personal details, gleaned from our searches online and YouTube downloads, with the vast repository of information collected by DoubleClick, the FTC has sanctioned the creation of a new digital data colossus,” said Jeff Chester of the Center for Digital Democracy.
Parallel with the merger’s approval, the FTC proposed behavioral marketing principles that would allow users to refuse to allow their data to be collected, require companies to provide “reasonable security” for the data and to safely dispose of it when it is no longer needed.
Behavioral advertising involves tracking a consumer’s activities online, including Web searches and sites visited, to target advertisements to individual interests.
The dissenting FTC vote in the Google-DoubleClick decision came from Pamela Jones Harbour, an independent.
“If the commission closes its investigation at this time, without imposing any conditions on the merger,” she wrote, “neither the competition nor the privacy interests of consumers will have been adequately addressed.”
Commissioner Jon Leibowitz, a Democrat, voted with the majority, but in a separate opinion, he cited serious privacy and competition issues.
The merger, which Australia and Brazil have already approved, is part of a rapid consolidation within the Internet advertising industry.
In recent months, Microsoft Corp (MSFT.O) bought aQuantive for $6 billion, Yahoo Inc YHOO.O bought BlueLithium for $300 million and Time Warner Inc’s TWX.N AOL unit bought Tacoda for an undisclosed amount.
The Center for Digital Democracy unsuccessfully asked FTC Chairman Deborah Platt Majoras to recuse herself from considering the deal because her husband works for a law firm representing DoubleClick before European regulators.
Editing by Lisa Von Ahn, Gary Hill