After several months of intense review, the European Commission has cleared Google's (NASDAQ: GOOG) $3.1 billion acquisition of online ad server DoubleClick, finding that the combined company would not substantially lessen competition in any sector of the Internet advertising economy.

"The Commission's in-depth market investigation found that 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," the EC said in a statement.

Microsoft, Yahoo and AOL -- a division of Time Warner (NYSE: TWX) -- provide compelling alternatives that would prevent Google from unfairly raising prices or forcing advertisers to purchase DoubleClick's ad serving or tracking tools, according to the Commission, the executive body of the European Union.

The unconditional approval gives Google the final regulatory clearance it needs to begin integrating the two companies' operations to form the cornerstone of its ambitious display advertising strategy. In December, the U.S. Federal Trade Commission blessed the acquisition, also without conditions.

Google's phenomenal success has largely been the product of its search advertising revenue, where advertisers bid on keywords and sponsored listings appear in results pages, placed through its AdWords program. In placing targeted display ads on relevant third-party Web sites, Google's AdSense program has had a tougher fight against rivals such as Yahoo (NASDAQ:YHOO) and Microsoft (NASDAQ: MSFT).

"We are thrilled that our acquisition of DoubleClick has closed," Google Chairman and CEO Eric Schmidt said in a statement. "With DoubleClick, Google now has the leading display ad platform, which will enable us to rapidly bring to market advances in technology and infrastructure that will dramatically improve the effectiveness, measurability and performance of digital media for publishers, advertisers and agencies, while improving the relevance of advertising for users."

At a conference yesterday Google executives acknowledged the shortcomings of its display platform and described the company's vision for becoming a one-stop advertising shop. Google's network would manage all forms of a brand's creative output -- including text, display, video and other types of placements.

The DoubleClick acquisition would provide Google the technology and inventory to close the gap between its search and display businesses, they said.

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As Google redoubles its efforts in the display business and looks to accelerate video revenue through YouTube and ad placements on third-party sites, it is also bracing for the competitive challenge from a combined Microsoft and Yahoo.

After vigorously lobbying regulators in opposition of the Google-DoubleClick combination, Microsoft will itself face an intense regulatory review if Yahoo accepts its acquisition bid. Today's approval could signal that the EC, which generally takes a harder look at mergers than U.S. regulators, would not categorically block a Microsoft-Yahoo combination, said analysts at Stifel Nicolaus.

However, they cautioned that such a review would treat Microsoft and Yahoo as much closer competitors than Google and DoubleClick, which the EC determined hold a vertical market relationship, are not in direct competition and would not be able to leverage their combined position to an unfair competitive advantage.

"The EU's rejection of vertical theories of anticompetitive theories of harm could provide some mild comfort to a possible Microsoft-Yahoo merger, although that would face a very difference assessment of horizontal concentration," the analysts wrote.

Today's approval came despite strident opposition from competitors such as Microsoft, as well as consumer advocates who warned of the privacy implications of combining the two companies' data sets.

The Commission echoed the FTC's view that privacy concerns, while serious, did not factor into the review of the merger.

Though EU Competition Commissioner Neelie Kroes had said last year that the investigation would only examine competitive issues, U.S. and European consumer advocacy groups continued a very public campaign to make privacy a part of the review.

"The EC appears to have embraced the FTC's flawed analysis of the online ad market," Jeff Chester, executive director of the Center for Digital Democracy, wrote in an e-mail to InternetNews.com.

While the EC determined that the Internet ad market is fragmented enough to warrant unconditional approval, Chester and other consumer advocates warn of market share consolidating into the hands of a few powerful Web players.

Google's DoubleClick buy last April came just weeks before Microsoft's $6 billion acquisition of aQuantive and Yahoo's move to buy the 80 percent of Right Media it didn't already own.

"There is no stopping of the centralized collection and use of data about consumer’s habits, online and off. That is one outgrowth of today's decision," said Joseph Turow, a professor at the Annenberg School of Communication at the University of Pennsylvania.

"The decision portends the approval of Microsoft’s bid to buy Yahoo," Turow said in an e-mail to InternetNews.com. He warned that the consolidation of massive amounts of personal data in the hands of a few large and powerful companies makes it very difficult for consumers to remain anonymous.