Author(s)
Source
American Antitrust Institute, November 6, 2007
Summary
This paper looks at how Google’s acquisition of DoubleClick might change competition in the online advertising market.
Policy Relevance
The online advertising market has become increasingly important to the vibrancy, if not survival, of newspapers and magazines. The merger of Google with DoubleClick raises serious competitive issues under several different antitrust theories.
Main Points
- Revenue from online advertising funds free online content such as news. About 6 percent of total advertising spending in the U.S. in 2006 came from online ads. By 2010, this number is estimated to reach 10 percent.
- The available evidence suggests that online advertising is sufficiently distinct as a market. A monopolist in this market would be able to increase prices by a small, but significant, amount without losing enough sales to offline sources to make the price increase unprofitable.
- DoubleClick is the leading provider of technology that helps publishers or advertisers target their ads using cookies. Revenues were $300 million in 2006.
- Google and DoubleClick are horizontal competitors in two markets
- In the market for distributing online advertising space of third party (non-search) websites, where Google’s AdSense is the market leader.
- In the market for publisher ad serving tools, where DoubleClick’s DART for Publishers is the dominant product.
- The merger could result in higher costs for web publishers to sell their advertising space, which ultimately may affect the diversity and richness of content available on the Internet and the vibrancy of the media.
- The AAI believes that the prudent course is for the Federal Trade Commission to block the merger unless the horizontal concerns are rebutted.
