FTC Clears Google’s (GOOG) AdMob Acquisition. What does it mean?

Apple iAd Admob

Apple iAd Admob

To little fanfare before the weekend the Federal Trade Commission (FTC) in the US cleared Google’s acquisition of AdMob. Google (NASDAQ:GOOG) dived in to snap up AdMob in late 2009, while Apple was mulling over the purchase itself.

The deal has been on hold while the FTC looked into it ever since then. The FTC’s initial concern was that Google snapping up a competitor in a market place that it is already dominant in could lead to antitrust worries.

In the meantime Apple purchased a similar, but much smaller and cheaper rival mobile advertising company called Quattro Wireless. This was morphed into iAd, Apple’s own entry into the mobile advertising arena, which is set to be an integral part of iPhone OS from version 4.0 onwards.

It is expected that, at least initially, Apple will only allow iAd to be used on its own devices. Whereas AdMob started out on the iPhone, but is now on Android too, and is expected to try and spread to as many platforms as possible. But its days on the iPhone seem numbered, at least in the iTunes App Store model. Because Apple seems to be locking other advertisers out by restricting their use of metrics to track consumers, so as to make their existence on its platform untenable.

On the surface of it the basic reason why the FTC cleared this acquisition by Google now is because of Apple’s move into the mobile ad arena with iAd. Apple (NASDAQ:AAPL) did Google a favor. Even if it didn’t intend to. Because as it stood, back in late 2009, Google had simply paid top dollar for a company which was potentially of no great strategic value to it, other than in a move to stymy Apple’s aspirations in the Google’s sandpit.

The FTC’s decision was probably also swayed to some degree by their perception of Apple’s dominance in the mobile market place generally. Their thinking being that some competition for Apple might be a good thing. And perhaps that Apple seems big enough and ugly enough to go toe to toe with Google in a market that it is traditionally dominant in.

If neither of those factors had been in play it is likely Google would have had to go to war and fight the FTC for this acquisition to be approved. Because as it stands even now AdMob has a de-facto monopoly on mobile advertising. Even if it may be short lived now.

“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.

But the hands off approach that the FTC has taken at this stage is certainly not one that comes without caveats.

Google is The (with a capital ‘T’) advertising powerhouse on the web globally, and the FTC is not without its concerns over that.

However, Google’s mobile phone market share at the time the FTC was looking over this, was to Apple’s mobile phone market penetration what Apple’s iAd is to Google’s global advertising behemoth currently. Of course things can change.

In some ways it could be said that the FTC feels it is creating some balance with its decision, and recognises that there is going to be healthy competition between Apple and Google in the future – which should in theory be good for the consumer. By consumer one could infer both us clicking on ads, and also advertisers who buy exposure from Apple (via iAd) and Google (via AdMob). But let’s remember Apple has not served a single ad yet.

Google is also a company that preaches, and to some extent practises, openness to all. Where as Apple presents a slightly less accessible front to its “partners”. Google has also played nice in terms of the US government’s world-view when it comes to things like China. It spends a bit more on lobbying than Apple does too. All these things may count for something.

Having said all that the FTC did have the following to say, “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.”

In other words if iAd fails (which is unlikely) they may look at this again.

Notice also that the FTC don’t specifically say “mobile advertising” in their statement. They say “mobile marketplace”. The FTC obviously have concerns over the mobile marketplace generally. And probably also feel that they still have a lot to learn too. It’s worth noting that they may still be mulling over an antitrust investigation into Apple over Flash, and also Google over some of its recent acquisitions of internet communications companies.

An interesting twist is to consider what would happen if Android gains massively in market share. Which if you believe Google, and certain analysts, is already happening. In that case AdMob will still be the only advertising network available to advertisers on Android, unless Apple opens up iAd. And it will be the only mobile advertising marketplace on a very large eco-system controlled by a company which is already The King of Advertising – globally!

When you look at this that way it’s hard to see who the FTC is actually protecting. Google has its own mobile phone ecosystem, which is actually quite closed from an OEM point of view. And it has an advertising network which is likely to be used more and more exclusively on their devices only. That is until HP or RIM get their act together.

Apple has an extremely closed mobile device ecosystem, and its own very closed advertising network – which is purportedly charging advertisers a premium to play on, as well as potentially being choosey about who can leverage the network in their apps. Two aspects that advertiser and consumers have yet to form solid opinions on, but have been heard to be apprehensive about.

The whole equation may be a little too complex for the FTC to form an opinion on, or effectively legislate for right now. Almost to the point that making a decision about advertising networks alone becomes moot currently.

Moving forward its likely that AdMob and Android will become synonymous with one another, likewise the iPhone, iPad and iAd will do the same.

At that point the FTC will have to decide if two companies, both with an effective monopoly for advertising in their own handset eco-systems is something they need to look at again.

When you look at it in its entirety, what choice did the FTC have today? And what have they actually achieved?
More to the point, what could they have achieved?

The FTC probably realised all this. Saw it had no effective decision to make. And so decided that the best thing to do was let this all play out, while keeping a close eye on both Apple and Google with regards to their mobile devices, OS and advertising networks in their entirety moving forwards.

What do you think? Are both Google and Apple monopolies in their own right? Should the FTC do something now, or later? Let us know in the comments…

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Stephen NorthcottFTC Clears Google’s (GOOG) AdMob Acquisition. What does it mean?