Could Google's and DoubleClick's Merger Plans End in Europe?

By Scott M. Fulton, III, BetaNews

September 24, 2007, 11:29 AM

Over five months after the two companies announced their intention to merge, search engine leader Google and display advertising leader DoubleClick petitioned the European Commission on Friday for clearance of their merger terms. This morning, according to the Associated Press, the EC responded by warning that a full investigation of their petition could consume as much as four months.

Since the US Federal Trade Commission announced it would investigate the merger terms, Google has tread very carefully in its proceedings with Europe, where antitrust laws in recent months have been somewhat more strict.

The news comes as the Wall Street Journal reports that Microsoft has hired a PR firm to direct selected Internet businesses to an online petition, scheduled to appear here, apparently in support of a "transparent and competitive Internet." Although the WSJ reports the connection between Microsoft and the firm Burson-Marsteller to be secret, BetaNews discovered this morning that the page where the petition will appear clearly lists Microsoft as its co-sponsor.

"ICOMP is a joint initiative sponsored by Microsoft and Burson-Marsteller to highlight important principles in online services and begin important industry discussions around copyright, privacy, and competition," reads the Initiative for Competitive Online Marketplaces this morning. Whether the page contained this message prior to this morning is unclear, since Google does not appear to have cached the page.

Nonetheless, in an article published yesterday in The Guardian, a Microsoft spokesperson was said to have denied the existence of this business arrangement.

What's all too odd about all this is that Microsoft's arguments in favor of competitiveness helped it to acquire German-based digital marketing agency aQuantive last month.

An op-ed piece in this morning's London Times suggests that the same principle used by the EC in upholding Germany's approval of the aQuantive deal - essentially that online advertising only represented a small share of the total global advertising market - may work in Google's favor. From the perspective of online advertising alone, Google's acquisition could give it half the world's ad traffic; but if regulators choose to view the case from the perspective of advertising as a whole - as they did in the aQuantive case - it could be just another M&A.

At issue now is, what happens to the merger deal if the EC inevitably rejects it...and if US regulators accept it. Since they're both American companies, can the deal still go through? Or would there be enough restrictions about how they do business in Europe for the deal to be virtually prohibited anyway.

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3:45 pm ET September 24, 2007 - A Google spokesperson told BetaNews this afternoon that Google and DoubleClick will only merge after all global regulators have approved the deal. Thus if the European Commission takes four months to review the procedure, and perhaps longer to debate its results, the two companies will be happy to wait, the spokesperson said.

Google won't speculate on the timetables the EC will adopt, the spokesperson added, nor on those for any other regulatory body. Still, the company believes the EC and others will separately come to the conclusion that the merger is in the best interest of the consumer.