Google, Microsoft Clash in D.C. Over DoubleClick

Lawyers from Google and Microsoft sparred in Congress today as the Senate Judiciary committee looked into antitrust concerns raised by Google’s proposed $3.1 billion DoubleClick acquisition.

Seeking to derail the purchase of the online ad firm, Microsoft General Counsel Brad Smith said in prepared oral testimony that if the government allowed the “GoogleClick” merger, “It will be bad for publishers, bad for advertisers, and most importantly, bad for consumers.”

Microsoft itself had been eying a DoubleClick acquisition in March, according to reports published in the Wall Street Journal. In May, the Redmond, Wash., software giant offered to buy online ad firm aQuantive, a DoubleClick rival, for $6 billion in cash. That deal closed last month.

Despite that acquisition, Smith testified today that Google remains poised to dominate the overall online search market.

He said Google is already the leading company in search advertising, with 70 percent of global spending on search-based advertising going through its AdWords unit. Allowing Google to buy online display advertising firm DoubleClick would give the company nearly 80 percent of all spending on non-search ads as well, his testimony read.

It would also make Google the “overwhelmingly dominant pipeline for all forms of online advertising,” Smith said in his testimony.

He also sought to raise privacy concerns over giving a single company control over what he called “the largest database of user information the world has ever known.” Specifically, that suggests Google will establish a database tracking not just searches, but movement across sites serving DoubleClick ads.

“With this merger, Google seeks to record almost everything you see and do on the Internet and use that information to target ads,” Smith said. “This merger will create a whole new meaning to the term ‘being googled.'”

Microsoft’s lawyer concluded his testimony by reminding the committee that since the passing of the Sherman Antitrust Act, “no one is permitted to buy success by purchasing its largest competitors.”

It’s this point that Google Chief Legal Officer David Drummond primarily addressed in his prepared rebuttal testimony.

“Our purchase of DoubleClick does not raise antitrust issues because of one simple fact: Google and DoubleClick are complementary businesses and do not compete with each other,” Drummond said. “DoubleClick does not buy ads, sell ads, or buy or sell advertising space. All it does is provide the technology to enable advertisers and publishers to deliver ads once they have come to terms, and provide advertisers and publishers statistics relating to the ads.”

Microsoft first protested Google’s acquisition in April. Since then, both have been able to rally third-party support to their cause. For its part, Google cited analysts and columnists quoted in the media.

Additionally, Thomas Leonard, a Senior Fellow at the deregulation-friendly Progress and Freedom Foundation, argued today that online advertising remains in a nascent state, and that “government interference with this evolving market, which is still in its infancy, could be quite harmful to consumers.”

On the other side, Microsoft helped sponsor an AEI-Brookings Joint Center for Regulatory Studies research project to show how display and search advertising dollars come from the same pool, thus enabling Google to dominate the entire ad market.

Also in the anti-GoogleClick camp, Marc Rotenberg, president of the Electronic Privacy Information Center (EPIC), testified before the committee to present the deleterious effects a Google/DoubleClick merger would have on consumer privacy.

“We believe that the commission should act to block the deal or to impose substantial privacy safeguards as a condition of the deal’s approval,” Rotenberg’s testimony read.

In addition to the Senate Judiciary committee, which has yet to weigh in on the proposed acquisition, the DoubleClick deal also remains under Federal Trade Commission regulatory review.

Earlier this year, EPIC, along with the Center for Digital Democracy and the U.S. Public Interest Research Group (US PIRG), filed complaints with the FTC over privacy implications in the merger.

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