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Jan. 3, 2010

So far, no less than two consumer groups have asked the U.S. Federal Trade Commission to block Google’s $750 million planned acquisition of mobile advertising firm AdMob.

In a letter to the FTC, the Center for Digital Democracy (CDD) and Consumer Watchdog alleged that the acquisition would be anticompetitve and would also raise privacy concerns for wireless users.

Both AdMob and Google gather pertinent data about mobile consumers' online behavior. AdMob targets wireless users by utilizing a wide range of methods, including behavioral, ethnicity, age, gender and education.

For its part, Google already provides mobile advertising and data-based analytical services through its DoubleClick subsidiary. The merger of AdMob into Google would significantly boost the amount of data that could be used to track, profile and target U.S. wireless users.

"Overall, the mobile sector is the next frontier of the digital revolution. Without vigorous competition and stronger privacy guarantees, this vital and growing segment of the online economy will be stifled," wrote John Simpson, consumer advocate at Consumer Watchdog.

“Permitting the expansion of mobile advertising through the combination of these two market leaders without first requiring privacy guarantees poses a serious threat to consumers,” wrote the two groups.

The CDD petitioned the FTC in March 2009 to specifically protect consumer privacy on mobile phones, especially involving mobile advertising.

The acquisition of AdMob would allow Google to expand its efforts in mobile advertising, in-app advertising and even with Internet display ads. In a post made last month on Google’s public policy blog, Google Product Manager Paul Feng said the FTC had made a second request for additional information about the deal.

Calling the scrutiny “one consequence of Google's success”, Feng said Google would work closely and cooperatively with the government agency.

“While this means we won't be closing our planned acquisition right away, we're confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes,” Feng added.

The two non-profit groups argued that Google’s planned acquisition of AdMob was an attempt to “buy its way to market dominance” in the mobile advertising market. The groups also claimed the deal raised what it termed "substantial" privacy concerns as well.

Overall, mobile advertising is still in its infancy. TV and Internet ads dominate the advertising landscape, and growth in the wireless ad segment has been sluggish, to say the least.

Many wireless industry analysts now view the November announcement of Google’s planned acquisition of AdMob as a long-awaited validation of the mobile advertising platform.

The next two months will be crucial for Google, and now many are impatiently awaiting the FTC's decision in Google's planned acquisition of AdMob.

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Source: The FTC.