EU to probe Google/DoubleClick plan

BRUSSELS (Reuters) - The European Commission opened a four-month, in-depth review on Tuesday of Google Inc’s plans to buy rival DoubleClick for $3.1 billion.

A Google search page is seen through the spectacles of a computer user in Leicester, central England July 20, 2007. The European Commission will open a four-month, in-depth review of Google's plans to buy rival DoubleClick for $3.1 billion, a source familiar with the situation said on Tuesday. REUTERS/Darren Staples

“The Commission’s initial market investigation indicated that the proposed merger would raise competition concerns in the markets for intermediation and ad serving in online advertising,” the European Union’s top competition regulator said in a statement, confirming what a source familiar with the situation had earlier told Reuters.

The Commission has 90 working days, until April 2, to take a final decision on whether the proposed transaction would significantly impede effective competition.

“The decision to open an in-depth inquiry does not prejudge the final result of the investigation,” it said.

Google’s chief executive, Eric Schmidt, said in a statement: “We are obviously disappointed by the European Commission’s decision to extend its review of our acquisition of DoubleClick.”

Schmidt said his company wants to avoid “further delays that might put us at a disadvantage in competing fully against Microsoft, Yahoo, AOL and others”, who have already purchased online advertising companies.

Google, which uses consumer queries to choose advertisements which appear on web surfers’ screens, wants to buy DoubleClick to increase its clout in tailoring advertisements to consumer activities.

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Both companies are involved in the sale of on-line ads, although their business models differ.

Google had proposed changes to its deal in an effort to address the Commission’s concerns.

Google competition counsel Julia Holtz has said in response to third-party concerns the company had committed to the Commission that it would keep certain DoubleClick business practices unchanged.

Critics have also raised questions about what effect the deal might have on privacy, but the Commission has said privacy by itself is not part of a competition review.

Google has by far the strongest position in Web searching in Europe. The acquisition has drawn vehement opposition from competitors such as Microsoft Corp and Yahoo Inc

The European Commission is working closely with the U.S. Federal Trade Commission, which has been reviewing the case since May.

In the United States, there has been one congressional hearing on the deal and Republicans are pressuring for more.

Google’s purchase is part of a rapid consolidation in the Internet ad industry that includes Microsoft’s $6 billion acquisition of aQuantive Inc, home to the largest interactive ad agency.

Yahoo bought BlueLithium for $300 million and Time Warner Inc’s AOL unit bought Tacoda.

Both of the acquired companies use “cookie” technology to record the Web surfing habits of consumers so advertisers can target ads based on the information.

Additional reporting by Dale Hudson; Editing by Ingrid Melander and David Holmes