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Groups Call on FTC to Block Google's AdMob Deal

A pair of consumer advocacy groups is calling on the Federal Trade Commission to block Google's purchase of the mobile ad network AdMob, warning that the $750 million deal would give Google a commanding position in the burgeoning wireless advertising sector.

Consumer Watchdog and the Center for Digital Democracy (CDD), both frequent critics of Google (NASDAQ: GOOG), delivered a letter today to FTC Chairman Jon Leibowitz asking the commission to squelch the deal, which they said threatens to drive up prices for advertisers and poses a serious risk to consumer privacy.

In the letter, the groups call AdMob a "direct competitor" to Google, arguing that the purchase of a company that bills itself as the world's leading wireless ad network would "substantially lessen competition in the increasingly important mobile advertising market."

Further, they warned of the anticompetitive threat that could emerge as Google becomes a more active player in the mobile sector in areas other than advertising. Google, of course, already offers the Android operating system that powers several popular smartphones, with others scheduled for release next year.

The groups mentioned the rumors that Google is planning to bring its own handset to market, arguing that access to AdMob's data could allow it to glean trade secrets from its competitors.

"Data about competing smartphone users and applications, gathered through the Google/AdMob advertising network, could give Google information about its competitors that would be advantageous in marketing its new smartphone, as well as models using its Android operating system," they said.

Responding to the groups' concerns, Google spokesman Adam Kovacevich pointed out that AdMob is hardly the only game in town when it comes to mobile advertising and that it's all but impossible to arrive at a clear assessment of market share given the multitude of privately held ad networks that don't disclose the size of their audiences.

"We're confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes," Kovacevich told InternetNews.com. "There are more than a dozen mobile ad networks and this deal is similar to mobile advertising acquisitions that AOL, Microsoft and Yahoo have made in the past two years."

The timing of the letter from Consumer Watchdog and CDD is no coincidence. Last week, word surfaced that the FTC had issued a second request for information about the deal, a common step in antitrust reviews that is by no means a death knell for the merger.

Just the same, the groups are hoping that the FTC will block the transaction outright, revisiting many of the same concerns that consumer advocates raised in 2007, when the commission was reviewing Google's acquisition of DoubleClick, which it ultimately approved.

In addition to the issues of competition and market power, the groups warned that pooling AdMob's stores of consumer data with Google's raises substantial privacy concerns. Pointing to industry analyses that project a rapid uptick in mobile searches, they argued that the acquisition of a company that specializes in serving targeted ads on the mobile Web would enable Google to draw richer and more detailed consumer profiles.

But for Google, which has long been Exhibit A in the online privacy debate, the issue is a separate matter from the FTC's antitrust review. While acknowledging the importance of respecting consumers' personal information, Kovacevich pointed out that the FTC ruled in its order approving the DoubleClick acquisition that it could not attach privacy conditions through an antitrust review.

In January, CDD along with another group, U.S. PIRG, filed a petition with the FTC calling for mobile marketing rules to protect consumer privacy.