For Immediate Release
(202) 224-5653
KOHL URGES CLOSE SCRUTINY OF THE PROPOSED GOOGLE ADMOB MERGER
April 6,2010
The Honorable Jonathan
Leibowitz
Chairman, Federal Trade Commission
Dear Chairman Leibowitz:
I am writing to you regarding the proposed
acquisition of AdMob by Google, now under investigation at the Federal Trade
Commission. It is my view that this merger raises important competition issues
which should be reviewed carefully and with close scrutiny by the Federal Trade
Commission.
This acquisition, if consummated, would
combine Google, with a dominant share of internet search and internet search
advertising on traditional desktop and laptop personal computers (PCs), as well
as a strong and growing mobile advertising business, with AdMob, the leading
provider of advertising to mobile devices commonly known as “smart phones” (such
as the Apple iPhone). Critics of this transactions worry that this deal will
allow Google to merge with one of its biggest rival mobile advertising
competitors, and leverage its dominance of PC-based search advertising market
into the emerging mobile advertising market, particularly with respect to
advertising embedded in smart phone applications. The parties to this
transaction argue, on the other hand, that there are ample competitors in the
smart phone search and application-based advertising market, and also contend
that the market for advertising on mobile devices is too nascent to determine
that any transaction will lead to dominance by any one company.
The importance of this transaction is
heightened because of the likely importance of the smart phone advertising
market in the future. Sales of smart phones are undergoing explosive
growth. Consumers are increasingly using these phones to search the Internet
and to make use of the applications downloaded onto these devices. Smart
phones are a uniquely powerful method for advertisers to reach consumers,
because most consumers with smart phones carry them most of the day, and
frequently use them to access and search the Internet. Many industry experts
expect more Internet searches to be done on smart phones than on PCs in the next
five to ten years and that mobile advertising on smart phones will become a
dominant advertising medium. Industry experts have estimated that revenue from
advertising delivered over handheld devices will leap from $416 million in 2009
to $1.56 billion in 2013.
It is therefore of vital importance to be
wary of any transaction that would create undue market dominance of search or
application-based advertising on mobile devices such as smart phones.
Allowing any one firm to dominate this market could result in higher prices for
mobile advertising on the Internet and with respect to smart phone applications,
and also could result in lower revenues realized by applications developers.
Without reaching any conclusion as to whether the Google/AdMob transaction would
create such dominance or would cause any substantial harm to competition, I
believe it is essential that the FTC scrutinize this deal very closely to
carefully examine this question.
The FTC should also pay close attention to
the privacy interests implicated by this transaction, as the combined firm will
gain access to a treasure trove of data on millions of consumers’ behavior,
search and product preferences. The FTC should assure itself that the deal,
if approved, will have sufficient safeguards to protect consumers’
privacy.
I recognize that advertising on mobile
devices, and on applications running on these devices, is a new and nascent
market with business models in the process of developing. While antitrust
regulators need to be cautious with respect to transactions affecting such a
market, at the same time antitrust authorities should not allow harm to
competition that may substantially harm competition in its incipiency. The
stakes are very high in protecting a fully competitive market in this
increasingly important sector of the high tech economy. Thus the incipiency of
the smart phone advertising market is not in itself a reason for the FTC to
desist from taking any necessary action to enforce the antitrust laws or protect
competition should it determine such action is necessary. Ensuring a vibrant
and competitive mobile device advertising marketplace should be a top priority
for the FTC as it considers this deal.
Thank you for your attention to this
matter.
Sincerely,
_______________
HERB
KOHL
Chairman, Subcommittee on
Antitrust, Competition Policy
and Consumer Rights