Google's proposed merger with online advertising server DoubleClick would create a giant that would control a huge portion of online advertising and hurt the Internet, opponents of the deal told U.S. lawmakers Thursday.
[ Talkback: MS plays competition card? ]
The merger, proposed in April, would create "extreme market concentration," said Scott Cleland, chairman of Netcompetition.org, an advocacy group representing large broadband providers. The merger would leave online advertisers with "no real competitive choice," he told the Senate Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights.
Microsoft general counsel Brad Smith argued that the marriage of Google and DoubleClick will allow Google to control 70 percent of the search-based advertising market and 80 percent of the online display advertising market.
Smith, whose company is still under court supervision for its own 2002 antitrust settlement with the U.S. government, suggested regulators should reject the Google-DoubleClick merge on antitrust grounds.
"What are the economic consequences of allowing the largest company in online advertising to acquire its most significant competitor?" Smith said. "If Google and DoubleClick are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising."
But David Drummond, Google's chief legal officer, argued that DoubleClick has a different business model than Google. "We are confident that our purchase of DoubleClick does not raise antitrust issues because of one simple fact: Google and DoubleClick do not compete with each other," he said. "DoubleClick does not buy ads, sell ads, or buy or sell advertising space. We sell ads, DoubleClick delivers ads."
Microsoft's estimates of Google and DoubleClick controlling 80 percent of the display ad market is a "made-up number," Drummond added.
A little more than a month after Google announced plans to acquire DoubleClick for $3.1 billion, Microsoft announced that it would said acquire aQuantive, a digital marketing services agency, for $6 billion. Yahoo and AOL have recently announced their own acquisitions in the online advertising space.
Cleland argued that the Google-DoubleClick deal represents the biggest threat to competition in online advertising. He called the U.S. government's antitrust review "a watershed moment for Internet competition."