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Is the AdMob-Google Deal at Risk?

Google's $750 million proposal to acquire the mobile ad network AdMob is coming up against objections from both privacy advocates and the US government. Last week, the Federal Trade Commission told Google it was making a second inquiry into the deal, according to a Google blog post.  Putting on its game face, Google assured readers such inquires are routine and the deal will be approved eventually.

Objections in Other Quarters

Now, two consumer organizations - the Consumer Watchdog and Center for a Digital Democracy - are urging the FTC to block the deal entirely.  If the AdMob deal goes through, it would be Google's second largest acquisition, after the $3.2 billion DoubleClick deal. The timeline of that transaction, though, does not bode well for AdMob, as it took at least a year longer than Google expected for it to clear regulatory hurdles.

A Weak Case

The FTC under the Obama Administration has made clear it would give anti trust enforcement greater attention so this inquiry is not that surprising, says Ryan Radia, an analyst with the Competitive Enterprise Institute (via the E-Commerce Times). However "the arguments against the deal are not strong at all," he says. "Google is competing in a large space - not just the search market, but also offline and mobile advertising. So the argument that Google has concentrated power in the advertising space doesn't square with reality."

There has been no evidence to show that consumers would be hurt by Google's acquisition of AdMob - or for that matter, by any of Google's market actions, he adds. "Its services are still free and it still brings new services to market all the time, so why intervene?"

The Privacy Issue

More than likely the AdMob deal will be approved. However, with Congress increasing its interest in online behavioral monitoring, there is a chance that the privacy issues associated with mobile marketing will come under examination. Indeed, given the fact that GPS-enabled smartphone reveal far more about people's day-to-day activities than desktop surfacing does, such scrutiny is almost inevitable.

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