FTC Clears Google DoubleClick Takeover amid Privacy Concerns

Under antitrust law, privacy concerns aren’t enough to block a merger, the FTC concluded. “Although such issues may present important policy questions… the sole purpose of federal antitrust review of mergers and acquisitions” is to examine effects on competition, the FTC said. It promised to keep its eye on Google and if it sees “unlawful tying or other anti-competitive conduct, the Commission intends to act quickly,” it said.

FTC Commissioner Jon Leibowitz cited “substantial privacy issues, that in part brought to light by the deal, clearly transcend it,” though he joined the majority approving the merger. If the online industry “doesn’t adequately address consumer privacy” through self- regulation, “it may well risk a far greater response from the government,” he said.

Only Commissioner Pamela Harbour dissented, noting her “alternate predictions about where this market is heading, and the transformative role the combined Google/DoubleClick will play.” If the FTC didn’t impose merger conditions, “neither the competition nor the privacy interests of consumers will have been adequately addressed,” she said.

Google voiced pleasure at the knowledge that the FTC found it and DoubleClick “complementary” businesses, not rivals. Noting privacy concerns over the merger, Google CEO Eric Schmidt said for his company, “privacy does not begin or end with our purchase of DoubleClick… we will continue to innovate in how we safeguard their information and maintain their trust.”

The Center for Digital Democracy, a vocal merger critic, said the FTC “sidestepped its responsibility” by approving the merger of two companies “whose new, extended data-collection reach will give it unprecedented access to track our every move throughout the digital landscape.” The FTC “sanctioned the creation of a new digital data colossus,” said Executive Director Jeff Chester. He contested the majority view that, in his words, “consumer privacy can’t be addressed by current antitrust law,” saying the decision “reveals a lack of leadership and determination to protect U.S. consumers.” Chester said CDD is working on “possible legal action” against FTC Chairman Deborah Majoras for refusing to recuse herself from the case though her husband works at the law firm which represents DoubleClick in Europe. CDD is pursuing a Freedom of Information Act request on the matter and will call for congressional oversight hearings, he said.

The approval is an opportunity “for Google to step up and make a clear, public statement about its plans for proactively protecting consumer privacy,” said President Leslie Harris of the Center for Democracy and Technology. Behavioral targeting raises privacy and consumer protection issues that require “ongoing attention from companies, consumers and policymakers,” especially considering the “number of major mergers and acquisitions of behavioral targeting firms that have been announced this year.”

But the Computer & Communications Industry Association endorsed the FTC decision. The controversial merger “will likely spur innovation and enhance competition in the online advertising arena,” it said. As the DoubleClick deal does, recent “high-profile acquisitions” show “that the online advertising space is a highly competitive, rapidly changing segment of the advertisement marketplace, with many options for customers,” said CCIA President Ed Black. The FTC was right to separate consumer privacy concerns and merger review, he said. “It’s important that dynamic and innovative Internet companies not be artificially constrained as they experiment with new technology, products, and business strategies,” he said. “Privacy remains an important issue, but these concerns will benefit from separate, industry-wide consideration.” The Competitive Enterprise Institute called the merger approval “a positive signal to digital pioneers, encouraging efficient consolidation and advancing the evolution of the online marketplace.”

Self-Regulation Principles

The FTC behavioral targeting principles say transparency and consumer control over tracking and targeting should be paramount. Advertisers should have “reasonable” data security, limit data retention and require consumer consent for changes to privacy policies and for the use of “sensitive data,” the commission said. It’s accepting public comment on the principles until Feb. 22.

The guidelines are “a clear sign” that the commission doesn’t believe industry’s “current self-regulation framework is sufficient to protect consumers today,” said CDT Deputy Director Ari Schwartz. “We'll need a rigorous mix of self-regulation backed by regulatory enforcement.”

Google is “studying these proposals carefully,” Chief Legal Officer David Drummond wrote on the company blog. AOL Chief Privacy Officer Jules Polonetsky said the proposed principles “will help crystallize emerging best practices across the industry.” Behavioral targeting is a promising technology for consumers and advertisers, but only if advertisers “do it in a trustworthy manner and for consumers’ benefit,” he said. - Alexis Fabbri