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Google Announces Deal to Purchase DoubleClick

Antitrust and Privacy Concerns Remain

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Updated March 11, 2008
On April 13th, 2007, Google announced that they had purchased DoubleClick for 3.1 billion dollars in cash. This is an even larger deal than the 2006 acquisition of YouTube for 1.6 billion dollars.

What Is DoubleClick?

DoubleClick is an Internet advertising company. They do not create advertisements themselves, but they create the technology that displays and tracks ads. DoubleClick includes many high profile clients, such as Ford Motors and About.com. DoubleClick has a large range of products aimed at advertisers, Web content publishers, and advertising agencies.

Why Did Google Want DoubleClick?

Google makes most of its money from online advertising. Google has recently branched into radio and television advertising, but Internet ads will likely remain its primary source of income.

The main source for Google advertising is through Google's AdSense program, which places contextual text ads on Web pages and search results. Google has experimented with display advertising for AdSense, but the majority of AdSense advertising is still in the form of contextual text.

DoubleClick is already an industry leader for serving video and graphic display ads. This type of advertising typically costs more for advertisers and generates more revenue for the sites that display them. Acquiring DoubleClick helps Google expand into the lucrative display ad arena.

Another reason Google may have moved to purchase DoubleClick is to make sure Microsoft didn't have the chance. Microsoft has been trying to gain traction for its Live search engine and AdSense competitor AdCenter. This may be why Google is willing to pay 3.1 billion dollars for what one source calls a $150 Million business. Google claims that Microsoft did not influence their decision to purchase DoubleClick.

Monopoly Concerns

AT&T, and Microsoft are displeased with the merger, which may give Google an unfair advantage. The anti-trust concerns are somewhat ironic coming from Microsoft and AT&T, which have both been criticized for anti competitive practices.

According to the New York Times, Bradford L. Smith, Microsoft’s general counsel, said the move would, "substantially reduce competition in the advertising market on the Web." While Jim Cicconi, senior executive vice president for external affairs at AT&T said, "We think antitrust authorities should take a hard look at this deal and the implications."

Google addressed this concern with their press release, saying,"We do not believe this acquisition is anti-competitive, as it promotes a vibrant, healthy market for online advertising."

Privacy Concerns

Both DoubleClick and Google track user information through cookies which are small files downloaded through your Web browser. DoubleClick has been criticized over user privacy. DoubleClick has responded with an extensive privacy policy statement. DoubleClick claims that the company does not retain personally identifying information across multiple Web sites.

Google does track personally identifying information in some cases, which is why you can log into Blogger and then switch to Google Docs or Google Reader without having to log in twice. The concern is that Google could potentially combine your search history with tracking information for Web sites which used DoubleClick to serve their ads.

Bradford Smith also played on that fear, claiming Google could, "observe and capture consumer information on an unprecedented scale."

Google, on the other hand, claims that they will use the acquisition to, "more broadly deploy and improve privacy enhancing technologies for users."

Update: The Google acquisition officially closed on March 11, 2008 after review by both US and European regulators.

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