Google’s $400 Million Admeld Purchase Approved by U.S. Justice Department

By Chris Dolmetsch - Dec 3, 2011 1:42 AM GMT+0700

Google Inc. (GOOG)’s $400 million purchase of AdMeld Inc. was approved by the U.S. Justice Department after regulators found competition in the online display advertising industry ensures the acquisition won’t harm consumers.

The department said today its investigation of the deal determined that Web publishers use multiple display advertising platforms and move business among them in response to price changes or the quality of ad placements.

“This use of multiple display advertising platforms, commonly called ‘multihoming,’ lessens the risks that the market will tip to a single dominant platform,” the department said in a statement.

Google’s acquisition of New York-based AdMeld, announced in June, will strengthen its position in online display advertising, the segment of the Internet ad market that’s outpacing others, according to Emarketer Inc., a New York-based digital research firm.

AdMeld offers technology services to Internet publishers that help manage display ads from hundreds of sources, including ad networks. Customers of the company, founded in 2007, include News Corp. (NWSA)’s Fox News and the Weather Channel.

‘Unprecedented Moment’

“This represents an unprecedented moment for publishers,” as opportunity in online advertising expands, Mountain View, California-based Google said in a statement posted on its official blog. “We believe that improved technology and services can help publishers seize it and make online advertising work much better.”

AdMeld Chief Executive Officer Michael Barrett said on the company’s website that the deal will close in the next few days.

Google, the world’s largest Internet-search provider, is using acquisitions to add services and find new sources of advertising. It made 57 purchases of intangible assets during the first three quarters of the year, according to an Oct. 26 regulatory filing.

The company is expected to grab 9.3 percent of online display advertising spending in the U.S. this year, up from 8.6 percent last year, making it the No. 3 provider, according to EMarketer. Facebook Inc. will increase its share to 16 percent, the No. 1 position, up from 12 percent a year ago, while Yahoo! Inc. will drop to 13 percent from 14 percent, EMarketer said.

Higher Sales

Google, which generates most of its revenue from advertising, posted higher sales during the third quarter as the number of clicks on ads rose about 28 percent and the average price per click increased about 5 percent. Sales, excluding revenue passed on to partner sites, rose to $7.51 billion.

The department’s approval of the AdMeld deal contrasts with its treatment of Google’s $676 million purchase of ITA Software. In April, the antitrust division imposed conditions on that deal, including requirements that Google make information from the travel-search company available to search-engine rivals and let the government review any complaints that it’s acting unfairly.

In August, Google said it would spend $12.5 billion for Motorola Mobility Holdings Inc., its largest deal. The Justice Department requested more information about the transaction as it extended its review, the companies disclosed Sept. 28. Google has said it expects to close that acquisition, announced in August, by the end of this year or in early 2012.

Shared Authority

The Justice Department and the Federal Trade Commission share authority to sue to block mergers they consider anticompetitive and to review whether dominant companies are abusing their market power.

In July, they ended two years of jockeying to lead an antitrust probe of Google, agreeing to divide responsibilities, two people familiar with the matter said at the time. The FTC is conducting a broad investigation of the company’s dominance of Internet search, Google disclosed on June 24.

“Although the antitrust division concluded that this particular transaction was unlikely to cause consumer harm, the division will continue to be vigilant in the enforcement of the antitrust laws to protect competition in display and other forms of online advertising,” the Justice Department said.

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.