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16 April 2024

Google completes $3.1bn buyout of ad firm DoubleClick

By Vigyan Arya




Google has announced the completion of its acquisition of internet advertising company DoubleClick after receiving approval from the European Commission.

The decision ends almost a year of uncertainty surrounding the $3.1 billion (Dh11.3bn) deal, which was opposed by privacy and consumer groups, not to mention Microsoft. It also appears to have restored some measure of investor confidence – Google’s stock rose almost five per cent, up from near its 52-week low of $413 per share.

“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 European Commission said in a statement.

The report added: “Even if DoubleClick could become an effective competitor in online intermediation services, it is likely that other competitors would continue to exert sufficient competitive pressure after the merger.

“The Commission therefore concluded that the elimination of DoubleClick as a potential competitor would not have an adverse impact on competition in the online intermediation advertising services market.”

Google CEO Eric Schmidt welcomed the decision and expressed excitement about finally being able to bring the benefits of the combined companies to the market.

“As the combination of Google and DoubleClick delivers better, more relevant display ads, we’re also looking forward to delivering an improved online experience for users,” said Schmidt.

“Because user trust is paramount to the success of our business, users will continue to benefit from our commitment to protecting user privacy following this acquisition. And our scale and infrastructure mean that users will also be spending less time waiting for web pages to load.”

The addition of DoubleClick’s display advertising platform, said Schmidt, would help publishers and advertisers generate more revenue, which would support the creation of more internet content.

Display advertising tends to involve a graphic component, such as online banner ads, which are often used for branding in addition to, or in lieu of, soliciting online clicks. Google’s strength has been in pay-per-click ads, through its AdWords and AdSense programs.

Schmidt said that Google’s long-delayed integration planning can finally begin.

“As with most mergers there may be reductions in headcount,” he said. “We expect these to take place in the United States and possibly in other regions as well.”

Penry Price, Google’s Vice-President of advertising sales, said that since Google was not able to view DoubleClick’s products closely before gaining regulatory approvals he was unsure how quickly Google could integrate DoubleClick’s technology into its platforms.

Price told reporters at a media event at Google’s headquarters in New York that DoubleClick’s contracts would stay in place, but there is no news yet regarding pricing plans.

“We’re excited,” Price said. “It’s obviously really great news for us.”

However, some consumer groups worry that behavioural advertisements targeting internet users – in which Google will gain greater competence through its DoubleClick deal – will allow advertisers to assemble detailed profiles that threaten consumer privacy rights.

“This behavioural tracking – the practice of collecting and compiling a record of individual consumers’ activities, interests, preferences, and/or communications over time – places consumers’ privacy at risk, and is not covered by federal law,” one consumer watchdog has warned.

Internet users who chose to submit comments on Google’s official blog site took a similar position.

“The prospect of behavioural marketing makes me incredibly uneasy,” said Mark Hammond of Utah. “Companies should require an opt-in, not an opt-out, for behavioural advertising, so they would have to offer some sort of incentive for consumers to allow it.”

Respondent Lynn Inmon said: “It has long been a frustration of mine that absolutely everyone thinks they need more and more of my personal and private information. I have to give it to online stores, websites, credit companies, restaurants, hotel chains, doctors, jobs, and the list goes on and on.”

And Mike Wall said: “In my opinion you are being way too accommodating to the companies and not protecting the public enough.”

Google’s ambitions

Google expects to have a “very significant position” in the online display ad market by 2008-2009, according to the firm’s representative.

Tim Armstrong, Google’s President for North America Advertising and Commerce, said Google considered its video-sharing site YouTube as the “brightest light” for the company’s display-advertising potential.

Speaking at the Bear Stearns Media Conference in Palm Beach, Florida, he said Google’s advertising platform would evolve over time so that it would not distinguish between search and display ads.

Google has set up engineering and sales teams to figure out how to make money from ads on networking websites, a lesson it learned after slow efforts to make money from ads on News Corp’s MySpace, he said.