Google’s $750 million acquisition of mobile advertising company AdMob has been unanimously approved by the Federal Trade Commission. The agency said it concluded the deal was unlikely to inhibit competition in the bourgeoning mobile advertising space.
In a statement, the FTC said it “lacked reason to believe that the transaction would likely result in a substantial lessening of competition, especially in light of marketplace developments that occurred during the course of its investigation, including Apple’s acquisition of Quattro and its subsequent introduction of iAd.”
Apple’s Quattro acquisition was cleared without investigation, despite Apple’s strong position in the smartphone space with its iPhone and iPad devices.
In a prepared statement, AdMob Founder and CEO Omar Hamoui said,”We are extremely pleased with today’s decision from the Federal Trade Commission to clear Google’s acquisition of AdMob. Over the past six months we’ve received a great deal of support from across the mobile industry – and we deeply appreciate it. Our focus is now on working with the team at Google…to quickly close the deal.”
The FTC said its primary concern was that a Google acquisition of AdMob would stifle competition between the two companies which previously resulted in innovation and ultimately benefited publishers as a result.
It added, however, that those concerns were offset by Apple’s introduction of its iAd product, which it said “should mitigate the anticompetitive effects of Google’s AdMob acquisition.” The Commission vote to close the investigation was 5-0, but commissioners said that as the mobile advertising space begins to gain traction it will continue to monitor it to ensure the existence of a competitive environment.
In a blog post, Google’s Susan Wojcicki, VP of product management, wrote, “The decision is great news for the mobile advertising ecosystem as a whole… We’re very excited about the possibilities in this field. As an immediate matter, we’re now moving to close this acquisition in coming weeks. We’ll then start work right away on bringing AdMob’s and Google’s teams and products together. This industry is moving fast, and we’re excited to be part of the race!”
Interestingly, the FTC statement made repeated and direct references to Apple’s potential strength in the market, and even stated, “The Commission has reason to believe that Apple quickly will become a strong mobile advertising network competitor.” It pinpointed proprietary advantages currently held by Apple such as its close relationship with developers and its ability to target ads using data gleaned from sources such as iTunes. It also made reference to Apple’s control of its developers’ license agreement which it said gives it the “unique ability to define how competition among ad networks on the iPhone will occur and evolve.”
The FTC also highlighted the fact that Apple’s entry into the market distorted the ability to predict AdMob’s competitive ability going forward, with or without Google, since “AdMob’s revenue and market share are derived largely from the iPhone platform.”
Although AdMob says Android impressions are growing consistently across its network, it still relies heavily on traffic from Apple devices. Speaking with ClickZ in April, an AdMob spokesperson said 6.1 billion ad requests to its network originated from iPhone and iPod touch devices in March, compared with 2 billion requests from Android devices.
Ultimately, as a result of its investigation, the FTC appears to have acquired a detailed understanding of the wider mobile advertising space. On that subject, Paul Palmieri, president and CEO of rival mobile network Millennial Media commented, “One of the largest outcomes of this deal is that the FTC recognized how competitive this market is, and can be, provided it remains an open ecosystem. The burden is now on regulators, and Apple in particular, to preserve an open and competitive market that will provide the most choice and value for developers and consumers, no matter how tempting it is to do otherwise.”
UPDATE: This story was updated to include additional information about the FTC’s reasoning behind the decision to approve the acquisition, and to include Palmieri’s statement.