All Things D is reporting that the FTC is leaning towards blocking Google’s $750 million purchase of AdMob, an online advertising platform that Apple was also interested in acquiring before Google swooped in with a near-billion dollar purchase.
Citing unnamed sources close to the situation, Kara Swisher writes:
While the situation could change, of course, sources said that the lack of any kind of indication of clear direction of the inquiry this late in the game by FTC staff–which recommends action to its five commissioners–is a bad sign.
“The federal government is looking for a way to discipline Google in some way, because of larger concerns about its search power on the Web,” said one source. “And this is where it looks like it will try to show that concern.”
An official FTC position on the deal is expected to come sometime next week, and may in fact result in an injunction to stop the deal due to antitrust concerns.
Meanwhile, some are arguing that the FTC is ill-equipped to come to an informed and educated conclusion on the ramifications of Google’s proposed deal.
One mobile developer questioned by the FTC about the deal was Wertago, a company who has developed a nightlife app for both the Android and iPhone platforms. Their take is that the FTC simply has no idea what’s going on.
There is no way the FTC knows enough to support a decision to block the deal. The staff members we spoke to were not particularly knowledgeable about the mobile ad space they are considering interfering in, or about the technology sector more generally, or about mobile app development and monetization, or about the changes in the mobile advertising sector in the past year, or about the level of competition and pace of change and innovation in the market, however broadly or narrowly you define it. More generally, it seems obvious to us that the computer, web, and mobile technology sectors are so competitive and fast-moving that NO ONE has the knowledge, expertise, economic insight, or clairvoyance to say with much confidence precisely what effect the AdMob acquisition will have on competition in the market or on consumer welfare. We think a recommendation to block the acquisition would be a mistake.
If you read Wertago’s blog entry in its entirety, it’s not long before you realize that mobile advertising and the issues it encompasses are extremely varied and numerous. This is by no means an easy analysis, and the FTC, so says Wertago, simply isn’t sufficiently up to speed. “The more competitive an industry is,” Wertago astutely observes, “the more perfect a regulator’s knowledge must be to justify preempting a deal as anti-competitive.” Wertago’s experience with the FTC left them feeling more than discouraged.
Meanwhile, Google CEO and former Apple board member Eric Schmidt recently said that Google’s AdMob deal should pass regulatory muster in light of Apple’s purchase of the ad firm Quattro and the expected rollout of their mobile iAd service. “It’s evidence of a highly competitive market,” Schmidt explained to reporters at the annual convention of the American Society of News Editors back in early April.
We’ll keep you updated on this ongoing saga.