Privacy groups: Google-DoubleClick deal will hurt consumers

FTC accused of failing to meet obligations to the public

Google's pending US$3.1 billion acquisition of online ad-serving vendor DoubleClick will hurt consumers, according to two privacy groups opposed to the wholesale approval of the deal.

The responses came after the U.S. Federal Trade Commission voted 4-1 today to approve the deal, saying Google's proposed acquisition of DoubleClick is unlikely to substantially lessen competition.

In the wake of its decision, the FTC also proposed new principles to address important consumer privacy concerns associated with online behavioral advertising.

"[A] majority of the commissioners chose to ignore the privacy implications of the Google-DoubleClick merger and to propose instead the same self-regulatory approach to privacy protection that has repeatedly failed American consumers and could have been put forward whether or not a merger review was also underway," said Marc Rotenberg, executive director of the Electronic Privacy Information Center, in a statement.

Rotenberg said the FTC failed to protect the public's interest and its decision will have "far-reaching implications for the Internet economy and the privacy rights of American consumers."

In a blog post, Jeff Chester, executive director of the Center for Digital Democracy, said the FTC sidestepped its responsibility by approving "the merger of two companies whose new, extended data-collection reach will give it unprecedented access to track our every move throughout the digital landscape."

"Despite the FTC's claims, privacy is most certainly an antitrust issue," Chester said in the blog. "A key component of the online market dominance that companies such as Google have achieved is the aggregation and analysis of consumer profiles, including the merger of far-flung data sets and vast data warehouses that only a handful of companies now have at their disposal."

Earlier this year, EPIC and the CDD petitioned the FTC to block the deal unless Google made significant changes to its privacy policy. The groups argued that the combined company will have unparalleled access to Web users' personal information.

The commission downplayed concerns brought by the two groups, saying privacy concerns are "not unique to Google and DoubleClick," and "extend to the entire online advertising marketplace."

Recently, EPIC and the CDD called on FTC Chairman Deborah Platt Majoras to recuse herself from the review of the deal because her husband is a lawyer at Jones Day, the Cleveland-based law firm that is advising DoubleClick on the merger. However, DoubleClick and the FTC said that the Jones Day law firm hasn't represented the company before the FTC and Majoras declined to recuse herself from the review.

Rotenberg said EPIC and the CDD remain troubled by the role of the Jones Day law firm in the proceeding and said it should be investigated. When asked about the threatened legal action, Rotenberg said EPIC and the CDD are "pursuing the expedited Freedom of Information Act requests" they filed with the FTC asking for all documents relating to the connection between Jones Day and the Google-DoubleClick deal.

For its part Google said it remains committed to user privacy.

"For us, privacy does not begin or end with our purchase of DoubleClick," said Eric Schmidt, Google chairman and CEO, in a statement. "We have been protecting our users' privacy since our inception, and will continue to innovate in how we safeguard their information and maintain their trust."

Peter Swire, a professor of antitrust and privacy law at Ohio State University's Moritz College of Law, said the FTC missed its chance to explain more clearly how privacy fits into antitrust law.

"Privacy can be an antitrust issue in this way -- a merger can affect the quality of a product, for instance, if you search and there's no tracking, or if you search and there's a lot of tracking of what you've done, then the quality of that product has gone down," Swire said. And "traditional antitrust focus is to make sure there's competition on quality. So if we have that kind of effect on quality, then antitrust enforcement should kick in."

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