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U.S. Senate urged to oppose Google-DoubleClick dealPolitics Watch ® News Services
September 28, 2007, updated 1:00 p.m.
http://www.politicswatch.com/google-september28-2007.htm

A Senate anti-trust subcommittee is the latest body to examine Google's $3.1 billion merger with DoubleClick . 

OTTAWA  —  Global Internet giant Google came under fire Thursday during a U.S. Senate hearing  examining the anti-trust implications of its plans to take over Web advertising provider Double Click. 

The $3.1 billion merger is now coming under heavy scrutiny in the U.S. and, as PoliticsWatch first reported last week, it is being reviewed by the Competition Bureau of Canada. 

The U.S. Federal Trade Commission and similar regulators in Australia and the EU are also examining the market competition impact of the deal. 

"From a competition perspective, we need to ensure that the market for Internet advertising remains competitive both for website publishers and advertisers," Vermont Senator Patrick Leahy said in his opening remarks. 

Critics of the deal say it will drastically reduce competition in the $27 billion a year Internet advertising business and would give Google undue control of the industry. 

"Advertisers could face higher prices as the number of viable choices for reaching websites diminishes," Microsoft counsel Brad Smith told the anti-trust subcommittee of the Senate judiciary committee. 

"Websites could see lower revenues, since a dominant provider with few competitive constraints will have the incentive and the ability to keep more of total online ad spending for itself."

Currently, Google is the dominant player in the pay search ad business. In 2006, the company reported $10.5 billion in total advertising revenues. DoubleClick is the leading online display ad firm. 

Google makes a distinction between display and search ads and argues the two business are complementary and would not be in violation of anti-trust regulations. 

David Drummond, senior vice president of corporate development and chief legal officer at Google, touted the benefits Google's Adsense program had given small Internet bloggers and Web sites, including $3.3 billion in ad revenues for its partners last year. 

Drummond pointed Senators to AskTheBuilder.com as a success story where the site owner allegedly earns $1,400 a day on Google ads. 

To put it in perspective, Forbes magazine reports Google co- founders Larry Page and Sergey Brin as the fifth richest people in America, each with a net worth of $18.5 billion. Since Google's launch in 1998, the two men have  earned a combined $11 million a day from Google.

Google does not, nor are they required at this time, to publicly disclose the exact revenue-sharing arrangement they offer to publishers under the Adsense program. 

"You'll receive a portion of the amount paid for either activity on your website," Google explains on its Web site to would-be partners. "Although we don't disclose the exact revenue share, our goal is to enable publishers to make as much or more than they could with other advertising networks."

Most Web sites and blogs earn mere pennies per click through while Google charges advertisers in dollars.

Scott Cleland, president of the tech analysis firm Precursor, told the Senators that the merger would make Google the "ultimate Internet gatekeeper," and create an advertising bottleneck allowing the firm to pick Internet content "winners or losers."

"Bottom-line: if a business wants its content to succeed on the Internet, it would have no choice but to use the Google-DoubleClick-YouTube online advertising platform," Cleland said. 

"No other entity currently has such a naked ambition to control or effectively corner the market for any of the world’s commodities.” 

:  Related Links

> Google's Double Click deal under review in Canada

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