Senators urge FTC to turn up the heat on Google + DoubleClick

Citing the possibility that DoubleClick's and Google's massive databases of personal behavior tracking and identifying information could be merged along with their businesses, two Senate leaders are asking the FTC to proceed cautiously.

The Democratic and Republican leaders of the Senate Subcommittee on Antitrust, Herb Kohl (D - Wisc.) and Orrin Hatch (R - Utah), wrote US Federal Trade Commission Chair Deborah Platt Majoras on Monday, urging caution and restraint in her investigation of the ramifications of the mergers of contextual ad provider Google and display ad provider DoubleClick.

"Industry experts that we spoke to in the course of our inquiry raised serious concerns that combining these two companies' leading positions in these two forms of Internet advertising could cause significant harm to competition in the Internet advertising marketplace," the senators wrote, referring to a Judiciary Committee panel on the topic last September 27. "While we have not reached any definitive conclusion regarding this issue, we urge that you only approve the merger if you determine that it will not cause any substantial lessening of competition with respect to Internet advertising."

Contrary to reports, Sens. Hatch and Kohl are not proposing that the FTC block the merger, but that it give the matter extra scrutiny. The Commission announced last May that it planned a thorough investigation.

The senators' admission that the results of their own investigation into the merger were inconclusive, could be more troubling for the potential merger partners than if they had advocated an outright block. Responding to a direct stand from the opposition is something DoubleClick's and Google's attorneys and public relations representatives are already well prepared to do, as they're demonstrating with regard to the European Commission's formal inquiry launched earlier this month.

The inconclusiveness of their current opinions is odd and perhaps awkward, given the plainly stated nature of their initial inquiry.

"What type of merger is proposed?" Sen. Hatch asked in his opening remarks to the Judiciary Committee panel last September. "I ask this question because Google argues, in information provide to the Committee, that they are not a competitor of DoubleClick. Is this then a conglomerate merger where we will explore the legal concepts of reciprocity and entrenchment? Is it a vertical merger? Or is this a merger, between two competitors competing for a portion of the internet advertising market? If this is the case, then the question of market power must be addressed."

Hatch cited figures supplied by "competitors" saying that the merged entities could conceivably control up to 80% of the Internet display advertising market. He then referenced a possible identity for one of those competitors: "This poses the question if any firm, even one with the resources of Microsoft, can overcome such a market position."

The second critical question Hatch raised concerned the ramifications of the merger on Internet users' privacy. This concern was raised again in Hatch's and Kohl's letter to the FTC:

DoubleClick collects an enormous quantity of information on individual Web users' preferences," they wrote, "and privacy advocates have expressed very serious concerns regarding the consequences of this data coming under the control of Google due to the fact that Google is the dominant internet search engine and can also track individuals' search requests. Therefore, we believe that this deal raises fundamental consumer privacy concerns worthy of serious scrutiny."

The lack of any suggestion that the FTC employ a heavy-handed approach to this merger may be indicative of Orrin Hatch's personal philosophy, which is that government can play preventative roles but should be prevented itself from playing too much of an oversight role. That stand became crystal clear a decade ago, when Hatch became one of the Senate's leading proponents for investigating, and perhaps punishing, Microsoft for its anti-competitive practices.

"Giving Microsoft a free pass to monopolize Internet-related technologies would ultimately lead to some form of government regulation that is far more intrusive than enforcement of the antitrust laws," Hatch said in a classic 1998 speech. "Let me suggest to those of you who abhor the regulatory state that you give this some thought: Vigilant and effective antitrust enforcement today is far preferable than the heavy hand of government regulation of the Internet tomorrow."

Hatch could conceivably have quoted that passage in his and Sen. Kohl's letter to the FTC Monday, which ended with the following: "Antitrust regulators need to be wary to guard against the creation of a powerful Internet conglomerate able to extend its market power in one market into adjacent markets, to the detriment of competition and consumers. We therefore urge that the FTC only approve this merger if it concludes, after a completing a comprehensive investigation, that this merger will not cause substantial injury to competition."