European antitrust regulators on Tuesday approved Google's US$3.1 billion merger with DoubleClick, which Google's CEO said will mean job cuts.
European Commission approved the deal without conditions -- three weeks before its 2 April deadline.
Eric Schmidt, Google's chief executive, 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."
The deal is likely to mean job cuts, Schmidt warned.
"As with most mergers, there may be reductions in headcount. We expect these to take place in the US and possibly in other regions as well," wrote Schmidt. The process of determining the right staffing levels in the US is expected to be completed by early April but may take longer for offices outside the country, he said.
After many months of review, the European Commission finally gave its stamp of approval to the merger, concluding that combining the two companies does not harm competition in the market.
According to the Commission's announcement, the deal was approved based on several factors:
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.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.
The Commission also analysed the potential effects of non-horizontal relationships between Google and DoubleClick, following concerns raised by third parties in the course of the market investigation.
These relationships concern DoubleClick's market position in ad serving, where Google, by controlling DoubleClick's tools, could allegedly raise the cost of ad serving for rival intermediaries, and Google's market position in search advertising and/or online ad intermediation services, where Google could allegedly have required purchasers of search ad space or intermediation to also purchase DoubleClick's tools.
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The Commission found that the merged entity would not have the ability to engage in strategies aimed at marginalising Google's competitors, mainly because of the presence of credible ad-serving alternatives, to which customers (publishers/advertisers/ad networks) can switch -- in particular, vertically integrated companies such as Microsoft, Yahoo, and AOL.
The market investigation also found that the merged entity would not have the incentive to close off access for competitors in the ad-serving market, mainly because such strategies would be unlikely to be profitable.
Google's rivals such as Microsoft, as well as privacy groups, were hoping that the Commission, as well as US antitrust regulators, would kill the Google-DoubleClick deal. But the Commission's passage clears the acquisition's last large regulatory hurdle.
Last December, the Federal Trade Commission gave the online-advertising mega-merger its blessing.
US regulators noted that Google and DoubleClick are not direct competitors and that the markets within online advertising evolve quickly. As a result, the FTC did not find evidence that competitive harm would arise from the merger.
The decision by the FTC had come after the European Commission determined in November that it would take a deeper look into the proposed merger. Some antitrust experts at the time noted that Google could face a difficult time in Europe, given differences in the way federal and European regulators evaluate mergers.
Opponents of the merger weigh in
"US and European policymakers must reform the antitrust process to reflect the realities of the digital-market era, where competition, data collection, and content creation are seamlessly intertwined," the Centre for Digital Democracy, which had presented its opposition to the FTC and the Commission, said in a statement on Tuesday.
"In today's digital marketplace, the company that controls the most data about consumers, and has the global reach to connect to them, raises both anticompetitive and privacy concerns. An antiquated and piecemeal antitrust approach fails to protect citizens, consumers, and competition," the statement said.
The organisation also cited concerns that the merger would aid Microsoft in its goal to acquire Yahoo. That deal is largely being driven by Microsoft's desire to bolster its online-advertising capabilities.
"Instead of ensuring competition, (the Commission) and the FTC have literally paved the way for the emergence of a global digital duopoly over online advertising," the Centre for Digital Democracy stated.
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