The U.S. Federal Trade Commission won't block Google's US$750 million acquisition of mobile advertising vendor AdMob because the deal isn't likely to harm competition in the emerging mobile advertising market, the agency said on Friday.
Google's acquisition of AdMob, announced in late 2009, combines the two leading mobile advertising networks in the US, raising "serious antitrust concerns", the FTC said in a statement. But Apple's announcement in April that it would launch its own ad network "overshadowed" the antitrust concerns that the FTC had about Google's AdMob acquisition, the agency said.
"As a result of Apple's entry [into the market], AdMob's success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob's competitive significance going forward, whether AdMob is owned by Google or not," the FTC said in a statement.
Several other companies appear to be developing or acquiring smartphone platforms to better compete against Apple's iPhone and Google's Android, the FTC said. These companies would have a strong incentive in maintaining a competitive mobile advertising industry, the FTC said.
Google praised the FTC's decision in a blog post by Susan Wojcicki, the company's vice president of product management.
"Throughout the FTC's review process, it's been clear that mobile advertising is growing rapidly," she wrote. "As mobile phone usage increases, growth in mobile advertising is only going to accelerate. This benefits mobile developers and publishers who will get better advertising solutions, marketers who will find new ways to reach consumers, and users who will get better ads and more free content."
The FTC's decision comes after reports suggesting the agency might oppose the deal. In April, The Wall Street Journal reported that the FTC appeared to be gearing up for an antitrust challenge of the deal.
The FTC will continue to watch the mobile advertising market, and mergers in fast-growing new markets will get the same antitrust scrutiny as older markets, the agency said. The FTC will keep an eye on the mobile advertising market to "ensure a competitive environment and to protect the interests of consumers," the agency said.
Mobile ad networks, such as those provided by Google and AdMob, sell advertising space for mobile publishers on Web sites accessed from smartphones such as the iPhone and devices that run Google's Android operating system.
Google and AdMob have competed head-to-head in recent years, and the FTC saw a "notable increase in intensity" during the past year, the agency said. This competition allowed mobile publishers to keep a large share of the revenue generated from the sale of their ad space, the FTC said.
The FTC's concerns were outweighed by Apple's recent announcement, the agency said. In January, Apple acquired mobile advertising provider Quattro Wireless and used it to launch its own iAd service. Apple can also leverage its close relationships with application developers and users, its access to a large amount of proprietary user data, and its ownership of iPhone software development tools and control over the iPhone developers' license agreement to compete in the mobile ad market, the FTC said.
Apple's entry into the mobile ad market "changed the dynamics" of competition in the mobile ad space, said Jeffrey Chester, executive director of the Center for Digital Democracy, a privacy group that asked the FTC in December to block the deal.
"However, the review by the FTC has helped regulators come up to speed on how the mobile marketing system affects consumers, including their privacy," Chester said. "We will continue to press the commission to ensure mobile privacy is protected, especially in a field dominated by Google and Apple."