Google Rejects Criticism of Its $750 Million AdMob Deal

Net search giant Google (GOOG) insists that consumer groups who argue its $750 million acquisition of mobile advertising firm AdMob should be blocked because it will harm consumers by stifling competition are mistaken.In a recent letter to the Federal Trade Commission, Consumer Watchdog and the Center for Digital Democracy said the acquisition announced on Nov. 9 will make Google too dominant in the growing market for mobile advertising.

%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% But in an email to DailyFinance, Google spokesman Adam Kovacevich said the deal wouldn't hurt competition. "We're confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes," Kovacevich says. "There are more than a dozen mobile ad networks and this deal is similar to mobile advertising acquisitions that AOL, Microsoft, and Yahoo have made in the past two years."

Besides, antitrust grounds, the AdMob deal also raises privacy concerns since both firms gather large amounts of consumer online data, the consumer groups said. AdMob collects information on users' ethnicity, age, gender, education and behavior. Google provides analytical services for mobile advertising through its $3.8 billion DoubleClick acquisition.

Last week, the FTC requested additional information about the deal, a development that does not necessarily signal that regulators are considering rejecting it. The deal, though, may take longer than expected to close.

In Google's view, the acquisition will benefit consumers by providing them with more free mobile applications instead of the pay ones, an argument rejected by consumer groups. Google has a list of supportive quotes on its website to bolster its argument.

"Consumers will face higher prices, less innovation and fewer choices," says John M. Simpson, consumer advocate at Consumer Watchdog, and CDD Executive Director Jeffery A. Chester, in a press release. "The FTC should conduct the appropriate investigation, block the proposed Google/AdMob deal, and also address the privacy issues."

As my colleague Vishsesh Kumar recently noted, the jury remains out on whether Google's acquisition spree benefits shareholders. YouTube, which Google acquired for $1.6 billion in 2006, has not been a barn burner for Google's bottom line. The AdMob deal would be Google's third largest.

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