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This article was published on May 18, 2010

FTC Is On A Mission To Punish Google Before The Facts Are Dry On The Page?

FTC Is On A Mission To Punish Google Before The Facts Are Dry On The Page?
Brad McCarty
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Brad McCarty

A music and tech junkie who calls Nashville home, Brad is the Director TNW Academy. You can follow him on Twitter @BradMcCarty. A music and tech junkie who calls Nashville home, Brad is the Director TNW Academy. You can follow him on Twitter @BradMcCarty.

The following post is a collaborative effort between @Alex (editor of TNW US) and myself (editor of TNW Google).

According to a recent blog post from the social development company behind the popular Echofon application, the FTC might not be 100% charitable and unbiased in its review of the proposed Google-Adbmob acquisition.

In the post the company claimed that the FTC “interrogated” them, always asking for examples of either potential or express wrongdoing by Google. They were hunting for dirt, and were brazen in doing so. When the company requested that certain information that would temper their claims be included in their official statement, the government agency acquiesced, but only after Echofon insisted. The FTC did not want include statements that made Google or the deal appear favorable. It did not fit their agenda.

At this point, the question must be whether the FTC is operating with an express agenda, and if so can they can handle the review of the proposed acquisition fairly. As it stands, the FTC is showing itself to be plainly biased against the Google/AdMob deal, without paying much attention to the facts that are staring the agency in the face.

As stated by the writer of the post, the Apple acquisition of Quattro Wireless could eventually prove to be a more dangerous scenario. It could lead to Apple mobile devices and the application stores that service them being to anyone not using the official Apple advertising platform. Apple’s acquisition however went smoothly, and it is working on its iAd platform with little to no complaint from governmental boards. Note that while the Quattro purchase was relatively relaxed, the iTunes App store is being stared at by agents wearing anti-trust goggles.

However, if the information laid out by Chika is accurate, the actions of the FTC are unprofessional and decidedly unethical. The questionings over the deal, recall that this is the FTC not the FBI, were intense enough to be though of as sessions of interrogation. To quote: “the FTC seemed to have a (strong) agenda.”

When Chika made a small statement that could be construed as anti-Google, “the FTC staff seemed to jump on my comment, and tried to use it to portray how unfair Google was.” No benefit of the doubt was awarded and no fact checking was needed for the FTC to press any possibly uncouth practice by Google to the edges of anticompetitive activity. The FTC seems to want to find an issue that they can use to block the deal.

Not to be forgotten in the mix is the impact of the breaking of the deal to both consumers and investors. Consumers stand to benefit from the deal as it will provide a strong counter balance to the potential rising hegemony of an Apple-Quattro combination, and investors stand to lose as Google has put forth a promise to pay. It works as follows, if the deal falls through Google still has to pay some 700 million dollars to AdMob. Most of a billion dollars to not acquire a company will hardly do wonders for the company’s stock price.

Even further, it will shift more power in the balance war to Apple, and its rival operating system and ecosystem. AdMob, which is a popular provider of advertising for both Android (Google), and iPhone (Apple), would make an excellent addition to the Google stable as both a tool for the promotion of Android to developers, and as a method to keep one hand in Apple’s pie, thus uniting the two companies via their developer pool.

In the end, the question becomes what will happen, and will it come to pass fairly. This is not the first time that the FTC has used heavy-handed tactics when investigating a case. However, as the Commission fights its own battles, there is a flurry of bad press surrounding it at the moment. It would benefit the Commission to listen to the consumer in this instance.

However, that raises the question of who fits the definition of a consumer in this case. Is it Google, or is it the companies that would be advertising using the platform? Or is it the final end user who views the advertisements? For the sake of argument, we will go out on a limb and say that it simply doesn’t matter, as Google, the companies using the service, and the day to day user all stand to benefit from the merger. The only person who loses is Apple.

While it would be a simple joke to point out that perhaps the FTC have been drinking the Steve Jobs Kool-Aide, it seems more likely that Google has garnered a reputation with the FTC that haunts it. As Facebook wants to change privacy, Google wants to change the internet, and prefers to do so by being everywhere at all times.

The FTC is right to be rigourous in their review of Google M&A activity, but this is one time where they are barking up the wrong tree by verbally abusing the wrong person. Back off FTC, find a real battle to fight. In fact, go re-open the Apple-Quattro deal and only approve it if Apple promises to give no specific advantage to iAd over any other advertising provider on their platform.

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