FTC and Congress Inspect Recent Web Ad Industry Acquisitions

It looks like trade and advocacy organizations — and even Microsoft — are getting their wish for Federal Trade Commission investigations into recent acquisitions in the online ad industry.

In addition to its review of Google’s industry-rattling $3.1 billion DoubleClick buy, the commission is looking into Microsoft’s counterattack acquisition of ad tech firm and agency-owner aQuantive, as well as Yahoo’s much smaller purchase of ad exchange outfit Right Media for $680 million.

The U.S. Congress is also peeking under the acquisition covers, according to Jeffrey Chester, executive director at the Center for Digital Democracy, who told ClickZ News his organization has met with the Senate Judiciary Subcommittee on Antitrust. The CDD, which has filed a complaint to the FTC regarding Google’s acquisition of DoubleClick, has also met with FTC commissioners regarding its concerns. During reviews, the FTC can gather data from multiple resources such as customers, competitors or advocacy groups, in addition to information from the companies in question.

Microsoft also publicly cried foul over Google’s DoubleClick buy, citing competition and privacy concerns.

Late last month the American Association of Advertising Agencies and the Association of National Advertisers petitioned the commission to look into the many recent acquisitions made within the interactive ad industry. Those organizations were particularly concerned about the potential for competition to be stifled by Web giants like Google and Microsoft both selling and serving ads — and in Microsoft’s case — buying advertising.

The trade groups didn’t limit their request for inspection into only Google’s and Microsoft’s recent purchases. One acquisition that could be of concern is WPP’s purchase of 24/7 Real Media, a $649 million deal. A company both buying advertising on behalf of agency clients and selling and managing ads through its own network and management platform may raise red flags regarding conflicts of interest.

24/7 announced today the normal 30-day period during which the FTC and U.S. Department of Justice could have requested more information regarding the acquisition has elapsed without a request for additional data. According to the Hart-Scott-Rodino Antitrust Improvements Act, companies must provide information prior to completion of a merger or acquisition to the FTC and DOJ if a transaction and parties involved meet certain criteria.

Though FTC investigations can be prompted by concerned competitors, pre-merger reviews are automatic under the HSR Act if an entity involved in a merger or acquisition has sales or assets of at least $100 million (adjusted), and the other has sales or assets of at least $10 million (adjusted). Also subject to review are transactions through which an acquiring firm will hold stock and assets of the firm to be acquired of over $50 million (adjusted).

“There are standard data requirements that have to be provided for a merger review,” said FTC spokesperson Claudia Bourne Farrell, who would not confirm or deny that any aforementioned reviews are in progress. “If in the course of the review we determine that questions are not answered by the first provision of information, we can ask for additional information so we can complete our investigation,” she continued.

It has been reported that the FTC has submitted a second request to Google in regards to its proposed acquisition of DoubleClick. Google didn’t respond to inquiries regarding the reported investigations. Yahoo refused to comment regarding a review; however, a company spokesperson said, “Yahoo’s acquisition of Right Media requires HSR clearance.”

Microsoft has also submitted a routine filing regarding its aQuantive acquisition, but a second request for more information has not been made by the FTC, according to the company.

The FTC would not confirm whether AOL’s recent acquisitions of ad management firm AdTech and mobile ad firm Third Screen Media are under review.

Although the CDD, along with the Electronic Privacy Information Center and the U.S. Public Interest Research Group have filed a complaint with the FTC requesting an investigation into Google’s DoubleClick buy, the CDD is pushing for a broader look into the entire online ad industry, in the interest of privacy, competition and diversity of information on the Web.

“There needs to be a very serious, thoughtful investigation of the online ad market,” said the CDD’s Chester.

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