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Google, Microsoft execs to testify at hearing on DoubleClick deal

Hearing to address antitrust, privacy issues of $3.1B sale

By Linda Rosencrance
September 27, 2007 12:00 PM ET

Computerworld - Executives from Google Inc. and Microsoft Corp. are scheduled to testify before a Senate panel today on the search engine company's planned $3.1 billion acquisition of online advertising company DoubleClick Inc.

In prepared testimony (download PDF) already posted online, Google Inc.'s chief legal officer, David Drummond, said Google's acquisition of DoubleClick will benefit consumers, promote free speech and help in the success of small businesses. Drummond is due to testify before the Senate Judiciary Committee's subcommittee on antitrust, competition policy and consumer rights.

"In our experience, our users value the advertisements that we deliver along with search results and other Web content because the ads help connect them to the information, products, and services they seek," the testimony stated.

According to Drummond, offering information to consumers in the form of relevant advertising is useful because it complements the subjects of their searches.

Drummond also said that Google is confident that its plan to purchase DoubleClick doesn't raise antitrust issues because the two companies don't compete with each other and are complementary businesses.

"DoubleClick does not buy ads, sell ads, or buy or sell advertising space," he said in his testimony. "All it does is provide the technology to enable advertisers and publishers to deliver ads once they have come to terms, and provide advertisers and publishers statistics relating to the ads."

He said Google's acquisition of DoubleClick wouldn't stop other companies from continuing to compete in the online advertising market.

As for the issues raised by privacy groups, Drummond said that Google believes in protecting the privacy of its users online and that the company is working to update its privacy practices and policies -- efforts that do not begin and end with the company's purchase of DoubleClick.

"We make privacy a priority because our business depends on it," he said in his testimony. "If our users are uncomfortable with how we manage the information they provide to us, they are only one click away from switching to a competitor's services. User interests effectively regulate our behavior, and user trust is a critical component of our business model."

Microsoft Corp., which opposes the deal, is also bringing out its big guns to testify.

"If Google and DoubleClick are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising," said Brad Smith, Microsoft's senior vice president and general counsel, said in prepared testimony.

While the merger will result in higher profits for Google, it will be bad for everyone else, including publishers, advertisers and users, because it will reduce competition, according to Smith's testimony.

Smith also questioned the antitrust and privacy issues of giving Google sole control over what he said is the largest database of user data in the world. "Online ads are served based on user data. As consumers we give up this data -- though often without knowing it -- in exchange for access to free content and services," he said. "With this merger, Google seeks to record almost everything you see and do on the Internet and use that information to target ads. One question is whether this merger will create a whole new meaning to the term "being googled."

Precursor LLC President Scott Cleland, who is also due to testify today, in his blog pointed to a recent antitrust analysis of the proposed merger that seems to discredit Google's defense that it is not a competitor with DoubleClick.

Cleland said the study suggests that DoubleClick customers think Google and DoubleClick compete against each other. The study is titled "An Antitrust Analysis of Google's Proposed Acquisition of DoubleClick," by Robert Hahn, director of the AEI-Brookings Joint Center for Regulatory Studies, and Hal Singer, president of Criterion Economics.

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