Inside Google

Two consumer groups asked the U.S. Federal Trade Commission to block Google Inc.’s (GOOG) proposed $750 million acquisition of mobile advertising company AdMob Inc., as they allege the deal would diminish competition to the detriment of consumers.

"Consumers will face higher prices, less innovation and fewer choices," said John M. Simpson, a consumer advocate at Consumer Watchdog. "The FTC should conduct the appropriate investigation, block the proposed Google/AdMob deal, and also address the privacy issues."

Google spokesman Adam Kovacevich said there are more than a dozen mobile advertising networks and added that none of the companies break out mobile ad revenue–making it impossible to judge market share. He also added that a number of peer companies–including Microsoft Corp. (MSFT) and Yahoo Inc. (YHOO)–have made similar acquisitions in the past two years.

"We’re confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes," said Kovacevich.

The request by Consumer Watchdog and the Center for Digital Democracy came after Google said Wednesday that the FTC has requested further information about the proposed acquisition. It was the FTC’s second request for information.

The investigation is the latest in a series of antitrust probes targeting the technology sector, as the Obama administration keeps its promise to step up antitrust enforcement. Google has drawn scrutiny as it attempts to expand beyond its strongholds in Internet search and advertising.

Besides antitrust issues, the acquisition raises privacy concerns, the two consumer groups allege. In a joint statement Monday, the groups said both AdMob and Google gather data about consumers’ online behavior, including consumers’ locations. AdMob, for example, targets consumers through the use of a number of methods including age, gender and education. The two companies’ combination, according to the groups, would provide "significant amounts of data for tracking, profiling and targeting U.S. mobile consumers."

"Permitting the expansion of mobile advertising through the combination of these two market leaders without requiring privacy guarantees poses a serious threat to consumers," the groups said.

Kovacevich said Google has "a track record of providing strong privacy protections and tools, like the new Dashboard, for users to take control or opt out of data collection." He added that in 2007, when the FTC cleared Google’s DoubleClick deal, the agency concluded that privacy didn’t provide a basis to challenge the transaction.

Google announced its deal to acquire the company last month. If it closes, the acquisition would be Google’s third-largest one.

Shares were recently up 0.8% to $623.16. The stock has more than doubled this year.
 
Contact the author at: John Kell, Dow Jones Newswires; 212-416-2480; [email protected]

(Jessica E. Vascellaro of The Wall Street Journal contributed to this article.)