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Senator, Microsoft wary of Google deal

/ Source: The Associated Press

The chairman of a Senate antitrust panel said Thursday that Google Inc.'s proposed $3.1 billion acquisition of online advertising firm DoubleClick Inc. "warrants close examination" by federal regulators.

At the same time, Microsoft Corp., which sought to acquire DoubleClick but lost out to Google, argued that the deal should be blocked because it is bad for competition and consumer privacy.

Because the deal would combine Google's position as the leading seller of text ads with DoubleClick's dominance of graphic display ads, Sen. Herb Kohl, D-Wis., asked whether "advertisers and Internet publishers (will) have no choice but to deal with Google, giving Google a stranglehold over Internet advertising and the power to raise ad rates."

( is a Microsoft - NBC Universal joint venture.)

While senators can't block the deal, they can express their concerns to antitrust regulators about combinations they oppose.

The Federal Trade Commission is reviewing whether the deal would stifle competition in the online advertising market. Consumer groups, meanwhile, are pressing the agency to require Google to strengthen its privacy practices as a condition of approving the transaction.

Brad Smith, Microsoft's general counsel, said the transaction would enable Google to "become the overwhelmingly dominant pipeline for all forms of online advertising." The deal raises privacy issues as well, Smith said, because it would give Google "sole control over the largest database of user information the world has ever known."

Microsoft has opposed the Google-DoubleClick deal since it was announced in April.

Microsoft itself remains subject to the terms of a five-year antitrust settlement it reached with the U.S. government in 2002, and the company also lost its appeal of a European Union antitrust case earlier this month.

David Drummond, chief legal officer at Google, said the acquisition won't lessen competition because the online search leader doesn't compete directly with DoubleClick.

Unlike Google, DoubleClick doesn't sell advertising, but instead provides technology and services to companies seeking to place display ads online, he said.

By way of comparison, he said that "DoubleClick is to Google what FedEx or UPS is to"

In addition, Drummond noted that Microsoft agreed earlier this year to pay $6 billion for Seattle-based online advertising firm aQuantive Inc. and Yahoo Inc. bought Right Media Inc. for $680 million.

The deals are evidence of "strong competition in the online advertising space," Drummond said.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, also testified before the committee. Rotenberg's group has objected that the acquisition would give Google access to an unprecedented amount of data on consumers' Web usage and Internet search preferences.

DoubleClick places and tracks online ads for its customers, and in the process collects data on consumer Web surfing habits. Google, the world's largest search engine, retains information on its users' searches.

Google's shares dropped 70 cents to $567.46 in afternoon trading.