Google, Microsoft Trade Barbs
Over Planned DoubleClick Deal
WASHINGTON -- Google Inc. and Microsoft Corp. traded barbs over the antitrust and privacy concerns raised by Google's proposed acquisition of DoubleClick Inc.
In prepared testimony released before a Senate committee hearing, Microsoft General Counsel Brad Smith assailed the deal. Allowing Google to acquire DoubleClick, an online advertising broker, "raises serious questions," he said. "If [they] are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising," Mr. Smith said. "It will substantially reduce the ability of others to compete."
Google Chief Legal Officer David Drummond, also in prepared testimony, said the deal doesn't raise antitrust concerns. Google and DoubleClick are complementary businesses that do not compete with each other, he said. "DoubleClick is to Google what FedEx or UPS is to Amazon.com," Mr. Drummond said.
Both Messrs. Drummond and Smith are set to testify Thursday afternoon before a Senate judiciary anitrust subcommittee that is reviewing the deal. That oversight is in addition to a review of the acquisition by antitrust regulators at the Federal Trade Commission.
The hearing is being overseen by Sen. Herb Kohl, a Wisconsin Democrat whose reaction to the testimony is important to the future of the deal. Earlier this year, Sen. Kohl criticized the combination of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. following a similar hearing.
Microsoft, which lost out to Google in trying to acquire DoubleClick, is one of a number of Internet and telecom companies that oppose the deal. Joined by firms such as AT&T Inc., Microsoft contends the merger would give Google control of the expanding online advertising market.
"Given the nature and economics of online advertising, this concentration of user information means that no other company will be able to target ads as profitably," Mr. Smith said.
Mr. Drummond noted in his testimony, however, that there have been a number of recent deals involving online advertising firms -- including Microsoft's purchase of aQuantive. "These acquisitions are strong signals that the market believes this space has lots of room for growth and competition," Mr. Drummond said.
In addition to antitrust issues, Mr. Smith also raised concerns about the potential Internet privacy concerns raised by the merger. Both companies compile a significant amount of consumer data, and critics have been wary of one company maintaining control over such a large database of information.
"With this merger, Google seeks to record almost everything you see and do on the Internet and use that information to target ads," Mr. Smith said.
Mr. Drummond outlined a number of steps Google has taken, and will take, to ensure the privacy of consumer information. "Google's bottom line is this: We believe deeply in protecting online users' privacy," Mr. Drummond said in the remarks.
A backdrop to the hearing is an ongoing feud between the two firms. This summer Google filed a complaint with the federal government over Microsoft's Windows Vista operating system, contending it violated the terms of Microsoft's 2002 antitrust settlement. The complaint was resolved after Microsoft agreed to update Windows Vista to accommodate other desktop search functions.
AT&T is opposed to the combination in part because it is one of the largest advertisers in the U.S. Additionally, the telecom titan has sparred with Google over the issue of network neutrality. Google has been one of the most outspoken tech firms in favor of government legislation on the issue, which AT&T opposes.
--Corey Boles contributed to this report.
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