Inside Google

The U.S. Federal Trade Commission should block the planned acquisition because it would diminish competition in the mobile- ad market, consumer groups said

(Bloomberg) — The U.S. Federal Trade Commission should block Google Inc.’s planned acquisition of AdMob Inc. because the deal would diminish competition in the mobile-advertising market, two consumer groups said.

The takeover would give Google dominance in mobile advertising and hurt consumers, the Center for Digital Democracy and Consumer Watchdog said in a statement today. The groups said they sent a joint letter to the FTC.

Google, the most popular Internet search engine, agreed last month to pay $750 million in stock for AdMob. The company aims to boost its sales of ads that appear in applications on mobile phones such as Apple Inc.’s iPhone. Google and AdMob combined will form the largest mobile-advertising company, with 30 percent to 40 percent of the market, according to Karsten Weide, an analyst with researcher IDC in San Mateo, California.

"Without vigorous competition and strong privacy guarantees this vital and growing segment of the online economy will be stifled," the consumer groups said in their statement.

Last week, Mountain View, California-based Google said it received a second request for information from the FTC on the AdMob acquisition. Google expects the FTC to conclude that the mobile-advertising market will remain highly competitive after the deal closes, company spokesman Adam Kovacevich said today.

There are more than a dozen mobile-ad networks and the AdMob purchase is similar to acquisitions by Microsoft Corp., Yahoo! Inc. and AOL Inc. in the past two years, he said. None of the companies break out mobile-advertising revenue, making it hard to estimate Google and AdMob’s market share, he said.

Previous Scrutiny

Google, which dominates the market for ads linked to Internet search results, has been the target of government scrutiny over previous deals. The FTC held an eight-month investigation of Google’s plan to buy DoubleClick Inc. in 2007 before giving its consent. Last year, Google walked away from a search deal with Yahoo after the U.S. Justice Department indicated that it would seek to block the agreement.

Google rose $4.39 to $622.87 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have doubled this year.

To contact the reporter on this story: Ville Heiskanen in New York at [email protected].