FTC scrutinizes Google’s bid to buy AdMob
Requests suggest more vigilance over search giant
SAN FRANCISCO - US antitrust regulators are taking a closer look at Google Inc.’s proposed $750 million purchase of mobile phone marketer AdMob, the latest sign of greater government vigilance as Google tries to expand its advertising empire.
The Federal Trade Commission sought more information about the deal this week, according to a post yesterday on Google’s blog.
This request does not mean regulators intend to block Google’s AdMob deal. Most other acquisitions that go through this stage end up getting approved.
But the FTC’s action shows regulators are watching Google more carefully as the company tries to build upon its dominance of the Web’s lucrative search advertising market. Google is expected to pull in more than $22 billion in revenue this year, mostly from ads shown alongside search results and other Web content.
“We know that closer scrutiny has been one consequence of Google’s success,’’ Paul Feng, a Google product manager, wrote in yesterday’s blog posting. Echoing previous management comments, Feng said the company remains confident its AdMob purchase, announced last month, will be approved.
In 2008, Google’s huge lead in Web search triggered a government investigation that scuttled its plans to enter into an advertising partnership with rival Yahoo Inc., which runs the second-most-popular search engine. Yahoo plans to work with Microsoft Corp. instead, beginning next year if those two companies can gain regulatory approval.
Since its inception nearly four years ago, AdMob has built a thriving network that sells and delivers ads on applications and websites designed for the iPhone and other mobile devices. It’s still relatively small, with estimated annual revenue of $45 million to $60 million, but regulators apparently want to understand whether its technology and advertising contacts would give Google an unfair advantage in its quest to sell more mobile phone ads.
Google management has indicated that it believes mobile marketing eventually might become bigger than advertising on online computers. That tipping point still appears to be many years away, with US mobile advertising expected to total $416 million this year, about 2 percent of Web ad spending in the country.
The FTC’s decision to take more time digging into the AdMob deal means Google probably won’t be able to take over the company for several more months, a Stifel Nicolaus analyst, Rebecca Arbogast, wrote in a research note yesterday.
Separately, Google ran into another potential roadblock yesterday after another takeover target, On2 Technologies Inc., said that it still had not collected enough shareholder support to close its deal. On2, based in Clifton, N.J., adjourned a shareholder meeting to approve its $106 million sale until Feb. 17 in hopes of getting the necessary support. Google agreed to buy On2 in August to help improve YouTube’s video technology.