US regulators are poised to block Google’s proposed acquisition of the mobile advertising company AdMob. The decision would restrict the search giant’s intention to extend its dominance of the internet advertising market.
Lawyers at the Federal Trade Commission (FTC) are likely to recommend that the Government halt the deal on anti-trust grounds. There are concerns that Google would use AdMob, the leading supplier of adverts that run on smartphones and other mobile devices, to gain a controlling position in a crucial new technology sector.
Reports indicated that the commission had assembled an internal litigation team to prepare for a challenge to the deal. “The staff believes there is a significant competitive problem and they are prepared to make a recommendation to sue,” a source told Reuters.
The move comes as Google, which generated 97 per cent of its $23.7 billion revenue last year from advertising, faces a growing list of investigations in the US and Europe on issues of competitiveness.
Regulators have been reviewing the AdMob deal for months. Google announced the proposed acquisition in November and said in December that it had received a second request for information from the FTC.
Google is betting that the acquisition will enable it to make healthy profits from mobile users, thanks to the rise of smartphones that can browse the web.
AdMob is the world’s biggest mobile advertising platform. The company claims to serve more than 8.5 billion mobile banner and text adverts per month across thousands of mobile websites and applications in more than 160 countries.
Google said that the acquisition would enhance its expertise and technology in the sector. Its Android operating system for mobile phones is used by many smartphone makers and it has launched its own Nexus One handset.
Senator Herb Kohl, the chairman of the anti-trust subcommittee of the Senate Judiciary Committee, this week sent a letter to the FTC urging “close scrutiny” of the deal.
“This acquisition, if consummated, would combine Google, with a dominant share of internet search and internet search advertising ... with AdMob, the leading provider of advertising to mobile devices commonly known as ‘smartphones’,” he wrote.
Google argues that there are more than a dozen mobile-advertising networks that provide healthy competition. “While we’re continuing to work with the FTC, there is overwhelming evidence that mobile advertising will remain competitive after this deal closes,” a spokesman said.
In February the European Commission launched a preliminary anti-trust inquiry into Google after three companies complained that the US giant’s dominant search engine penalised potential competitors and kept advertising prices artificially high.
--Mike Harvey
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