June 7, 2010 ANALYSIS of the FTC's DECISION NOT to BLOCK
June 7, 2010 ANALYSIS OF THE FTC’S DECISION NOT TO BLOCK GOOGLE’S ACQUISITION OF ADMOB Randy Stutz and Richard Brunell* Introduction On May 21, 2010, after months of investigation, the Federal Trade Commission (FTC) announced that it would not challenge Google’s $750 million acquisition of AdMob, a mobile advertising network and mobile ad solutions and services provider.1 In this white paper, we present AAI’s analysis of the FTC’s decision. The FTC found that, but for recent developments concerning Apple, the acquisition “appeared likely to lead to a substantial lessening of competition in violation of Section 7 of the Clayton Act.” According to the FTC, Google and AdMob “currently are the two leading mobile advertising networks, and the Commission was concerned about the loss of head-to-head competition between them.” The companies “generate the most revenue among mobile advertising networks, and both companies are particularly strong in … performance ad networks,” i.e. those networks that sell advertising by auction on a “per click” or other direct response basis. Without necessarily defining a relevant market, the Commission apparently saw a likelihood of unilateral anticompetitive effects, as it found “each of the merging parties viewed the other as its primary competitor, and that each firm made business decisions in direct response to this perceived competitive threat.” Yet, Apple’s acquisition of the third largest mobile ad network, Quattro Wireless, in December 2009, and its introduction of its own mobile advertising network, iAd, as part of its iPhone applications package, convinced the FTC that the anticompetitive effects of the acquisition “should [be] mitigate[d].” The Commission “ha[d] reason to believe that Apple * Randy Stutz is a Research Fellow and Richard Brunell is the Director of Legal Advocacy of the American Antitrust Institute (AAI), a non-profit research and advocacy organization devoted to advancing the role of competition in the economy, protecting consumers, and sustaining the vitality of the antitrust laws.
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