FTC unanimously gives Google go-ahead to buy AdMob for $750 million

The Federal Trade Commission gave the green light for Google to buy mobile advertising network AdMob after the deal had been held up for six months in a competitive review. The search giant agreed to buy the San Mateo company in November for $750 million, but the inquiry stalled the two companies from finishing the acquisition.

Apple’s acquisition of competing mobile ad network Quattro Wireless in January and its forthcoming iAd service seems to have pressured the commission into letting the deal pass despite concerns about Google’s power in online advertising markets. The commission specifically cited that move in its decision and voted to close the inquiry by 5 to 0.

“As a result of Apple’s entry, AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the Commission’s statement explains,” the commission said in a statement.

Many developers rallied behind Google during the inquiry, saying the FTC appeared to have its mind made up on blocking the deal despite the rapidly evolving mobile advertising market. AdMob is the leading mobile ad network, controlling an estimated 14 percent of the market. Apple originally offered to buy the company for $600 million, but it let a 45-day due diligence period pass. That gave Google a window to outmaneuver its rival with a sweeter offer.

Google said it will move to close the deal within a few weeks.

“The decision is great news for the mobile advertising ecosystem as a whole,” the company said in a statement. “This was reflected in the widespread industry support for our acquisition.”

The commission’s statement is here:

FTC Closes its Investigation of Google AdMob Deal
After Thorough Review, Agency Finds Transaction Not Likely to Harm Competition

The Federal Trade Commission has closed its investigation of Google’s proposed acquisition of mobile advertising network company AdMob after thoroughly reviewing the deal and concluding that it is unlikely to harm competition in the emerging market for mobile advertising networks.

In a statement issued today, the Commission said that although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market, most notably a move by Apple Computer Inc. – the maker of the iPhone – to launch its own, competing mobile ad network. In addition, a number of firms appear to be developing or acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android, and these firms would have a strong incentive to facilitate competition among mobile advertising networks.

“As a result of Apple’s entry (into the market), AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the Commission’s statement explains.

The Commission stressed that mergers in fast-growing new markets like mobile advertising should get the same level of antitrust scrutiny as those in other markets. The statement goes on to note that, “Though we have determined not to take action today, the Commission will continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers.”

For his part, AdMob CEO Omar Hamoui noted in the AdMob blog that the company had moved aggressively to launch new products during the review period.

Mobile ad networks, such as those provided by Google and AdMob, sell advertising space for mobile publishers, who create applications and content for websites configured for mobile devices, primarily Apple’s iPhone and devices that run Google’s Android operating system. By “monetizing” mobile publishers’ content through the sale of advertising space, mobile ad networks play a vital role in fueling the rapid expansion of mobile applications and Internet content.

According to the FTC’s statement, evidence gathered by the agency raised important questions about the transaction. Google and AdMob have competed head-to-head for the past few years, with a notable increase in intensity during the past year. This competition has spurred innovation and allowed mobile publishers to keep a large share of the revenue generated from the sale of their ad space. The companies also have economies of scale that give them a major advantage over smaller rivals in the business, the statement says.

These concerns, however, were outweighed by recent evidence that Apple is poised to become a strong competitor in the mobile advertising market, the FTC’s statement says. Apple recently acquired Quattro Wireless and used it to launch its own iAd service. In addition, Apple can leverage its close relationships with application developers and users, its access to a large amount of proprietary user data, and its ownership of iPhone software development tools and control over the iPhone developers’ license agreement.

The Commission vote to close the investigation was 5-0.

Google’s statement is here:

Today, the Federal Trade Commission cleared our acquisition of AdMob, a mobile advertising start up. We’re excited to work with Omar Hamoui and his talented team at AdMob to develop new mobile advertising solutions for marketers, mobile app developers and mobile publishers.

The decision is great news for the mobile advertising ecosystem as a whole. This was reflected in the widespread industry support for our acquisition.

Throughout the FTC’s review process, it’s been clear that the mobile advertising is growing rapidly.

As mobile phone usage increases, growth in mobile advertising is only going to accelerate. This benefits mobile developers and publishers who will get better advertising solutions, marketers who will find new ways to reach consumers, and users who will get better ads and more free content.

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!

Posted by Susan Wojcicki, Vice President of Product Management