The Federal Trade Commission has closed its investigation of Google’s proposed acquisition of mobile advertising network company AdMob after reviewing the deal and concluding that it is unlikely to harm competition in the emerging market for mobile advertising networks.
In a statement issued Friday, the Commission said that although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market, most notably a move by Apple to launch its own, competing mobile ad network. In addition, a number of firms appear to be developing or acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android, and these firms would have a strong incentive to facilitate competition among mobile advertising networks.
“As a result of Apple’s entry (into the market), AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the Commission’s statement explains.
At the April 8 unveiling of iPhone OS 4.0, Apple debuted iAd, Apple’s new mobile advertising platform, which "combines the emotion of TV ads with the interactivity of web ads," Apple CEO Steve Jobs said. Today, when users click on mobile ads they are almost always taken out of their app to a web browser, which loads the advertiser’s web page.
Users must then navigate back to their app, and it's often difficult or impossible to return to exactly where they left. Jobs said iAd solves this problem by displaying full-screen video and interactive ad content without ever leaving the app, and letting users return to their app anytime they choose.
He added that iPhone OS 4 lets developers embed iAd opportunities within their apps, and the ads are dynamically and wirelessly delivered to the device. Apple will sell and serve the ads, and developers will receive an industry standard 60% of iAd revenue.
The Commission stressed that mergers in fast-growing new markets like mobile advertising should get the same level of antitrust scrutiny as those in other markets. The statement goes on to note that, “Though we have determined not to take action today, the Commission will continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers.”
Mobile ad networks, such as those provided by Google and AdMob, sell advertising space for mobile publishers, who create applications and content for websites configured for mobile devices, primarily Apple’s iPhone and devices that run Google’s Android operating system. By “monetizing” mobile publishers’ content through the sale of advertising space, mobile ad networks play a vital role in fueling the rapid expansion of mobile applications and Internet content.
According to the FTC’s statement, evidence gathered by the agency raised important questions about the transaction. Google and AdMob have competed head-to-head for the past few years, with a notable increase in intensity during the past year. This competition has spurred innovation and allowed mobile publishers to keep a large share of the revenue generated from the sale of their ad space. The companies also have economies of scale that give them a major advantage over smaller rivals in the business, the statement says.
These concerns, however, were outweighed by recent evidence that Apple is poised to become a strong competitor in the mobile advertising market, the FTC’s statement says. Apple recently acquired Quattro Wireless and used it to launch its own iAd service. In addition, Apple can leverage its close relationships with application developers and users, its access to a large amount of proprietary user data, and its ownership of iPhone software development tools and control over the iPhone developers’ license agreement.
The Commission vote to close the investigation was 5-0. Copies of the Commission’s statement can be found at http://www.ftc.gov.
