At issue are the advertising tools Google acquired when it purchased the company in 2007 — namely, features like DoubleClick’s ad manager which may be able to push websites into using other products also managed by DoubleClick, such as their ad exchange. The Federal Trade Commission is setting up an antitrust probe to explore these possibilities.
The ad exchange was a new feature at the time of Google’s purchase in 2007, which allows Web publishers and advertising buyers to come together in an online marketplace and partake in auctions for advertising space, functioning much like the stock market. At the time, DoubleClick’s chief executive David Rosenblatt predicted that this feature would become the “chief money-maker” in a period of five years.
The effectiveness of DoubleClick’s products when partnered with Google represented a concern at the time of purchase, as well. In 2007, Congress held hearings on whether or not the deal presented antitrust concerns, with competitors Microsoft (NASDAQ:MSFT) and Yahoo! (NASDAQ:YHOO) fearing monopolistic control of online advertising space.
DoubleClick’s client network and relationships were immensely valuable, a resource Google lacked in its online ad space, and keeping such resources out of rival Microsoft’s hands was “worth billions to Google,” according to one analyst at the time.
These same concerns have prompted the FTC to follow their Euopean counterparts in exploring potential antitrust violations. With Google fending off European regulators recently, they announced they would give competitors more space on certain search pages, after being accused in Europe of hiding links to their competitors pages for shopping and travel websites, as well as some others.
Further looks at — and potential punishments for — Google’s advertising practices could bode well for its chief competitor in the space, Facebook (NASDAQ:FB), who comes in a close second in market share at 14.6 percent to Google’s 15.1 percent. Facebook has been looking to expand its share of the advertising space, reclaiming its earlier loss of General Motors (NYSE:GM) as an advertiser.
The social media giant recently hired several analytical companies to help explore its possibilities as an advertiser, and technologies have been implemented which can help Facebook ad clients determine demographics of customers — people in certain age groups likely to buy a given product. They are also finding ways to empirically show whether or not an online ad led you to a physical, retail purchase.
As Facebook grows in this space and looks for ways to become more competitive, any setback to Google resulting from antitrust allegations would be a win not only for Mark Zuckerberg’s company in itsefforts to become a market leader, but also any competitor looking to get a larger piece of the pie in this space.
Google and the FTC have both declined to comment on the probe at this time.