Online ads juggernaut DoubleClick has been acquired by search engine colossus Google in an all-cash US$3.1bn deal that will give both companies control over 80pc of online advertising.
The deal, subject to regulatory approval, was announced after the markets closed on Friday and is expected to close by the end of the year.
DoubleClick is understood to have been the subject of a fierce bidding war between Microsoft and Google and the winning bid is three times the amount DoubleClick fetched when it went private in 2005 for US$1.1bn.
The acquisition is the largest in Google’s history, beating the whopping US$1.6bn the search player paid for social networking and entertainment site YouTube.com.
New York-headquartered DoubleClick helps businesses to place and track online advertising, including the search ads business that Google has turned into a profitable business.
For users, the combined company will deliver an improved experience on the web, by increasing the relevancy and the quality of the ads they see. For online publishers, the combination provides access to new advertisers, which creates a powerful opportunity to monetize their inventory more efficiently.
And Google says that for agencies and advertisers, the combined entity will provide an easy and efficient way to manage both search and display ads in one place. It says they will be able to optimise their ad spending across different online media using a common set of metrics, siliconrepublic.com reports.
Microsoft, the world's largest software maker, said the deal would allow Google to corner the online advertising market and provide them access to a huge amount of information on consumer behavior on the Internet.
"This proposed acquisition raises serious competition and privacy concerns," said Brad Smith, Microsoft senior vice president and general counsel in an e-mail statement.
"We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market."
AT&T senior executive vice president of external and legislative affairs Jim Cicconi said on Sunday that Google would be in a position to pick winners and losers in the industry.
"If Google becomes the dominant force in terms of Web advertising and becomes the broker, that would be clear evidence of market power and dominant position." Cicconi said.
Industry analysts said the deal would let Google focus more attention on extending its advertising forces offline -- into the print, television and radio advertising arena, Reuters reports.
Any review of a merger on antitrust grounds begins with a determination of the “relevant market” in which the two companies operate. “That is the first hurdle in case like this,” said Andrew I. Gavil, a law professor at Howard University, “and it looks as if DoubleClick may well be in a nearby, or complementary, market instead of the same market as Google. And then the question will be how easy it is for new entrants to compete in the online advertising markets.”
Microsoft contends that the combined companies will have a stranglehold on the market for distributing ads to Web publishers.
Mr. Schmidt, however, said that Google and DoubleClick are “small components of a much larger advertising market,” and face considerable competition. He added that it is easy to switch to offerings from rivals of Google and DoubleClick, The New York Times reports.
“We understand that we will go through a regulatory process in the United States and Europe now,” Mr. Schmidt said. “Along the way, all these questions will be discussed and debated. And we welcome that.”
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