Inside Google

The US Federal Trade Commission on Friday approved Google’s $750m takeover of AdMob, saying that Apple’s entry into the fledgling but fast-growing mobile advertising market would “mitigate the anti-competitive effects” of the deal.

The FTC’s 5-0 decision marks a significant victory for Google, which has faced intense regulatory scrutiny of the deal since November.

The FTC said on Friday it had been “concerned” about the loss of head-to-head competition between Google and AdMob, the two leading rivals in the market for mobile ads, and that the deal necessitated “close scrutiny”.

But the FTC said that Apple’s acquisition of Quattro, the third-largest mobile ad network, in December 2009, and the creation of its own mobile advertising network, led the commission to believe that Apple would “quickly” become a “strong competitor”.

It pointed to Apple’s “extensive” relationships with application developers, its ability to target ads by leveraging proprietary data gleaned from users of Apple devices such as iPhones, and its ownership of iPhone software tools as evidence of Apple’s “unique ability” to define how competition among ad networks on the iPhone would evolve.

“As a result of Apple’s entry, AdMob’s success to date on the iPhone plat- form is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the FTC said.

US mobile advertising spending is expected to increase 42 per cent this year to $593m, according to eMarketer, and reach $1.5bn by 2013.

Susan Wojcicki, Google’s vice-president of product management, said in a blog: “The decision is great news for the mobile advertising ecosystem as a whole.”

The FTC faced immediate criticism for its decision from US consumer groups, who had argued that the AdMob acquisition would give Google “a massive amount of consumer data to exploit for its benefit”. They also expressed concerns about what consumer and privacy advocates claim is Google’s growing influence in Washington.

“We’re very disappointed, we think it’s still pretty clear that these two combined are an unstoppable juggernaut,” said John Simpson, Consumer Watchdog spokesman on Friday. “There’s also an arguable case that Apple’s activities need to be investigated right now with what they’re planning to do with Quattro and perhaps shutting people out of the iPhone platform.”

The FTC said it would continue to monitor the mobile marketplace. In recent weeks, the FTC has been engaged in talks with the Department of Justice over which competition authority would be best suited to initiate a potential anti-trust probe into Apple. Both groups have expertise in the area.

Apple declined to comment.

Additional reporting by Joseph Menn.