Microsoft launches campaign against Google-DoubleClick merger

Company wants to garner industry support to block merger

Microsoft Corp. has teamed with public relations and marketing agency Burson-Marsteller on a campaign to garner industry support for asking regulators to scrutinize and potentially block the proposed merger of Google Inc. and DoubleClick Inc.

Called the Initiative for Competitive Online Marketplace, or iComp, the group's mission, according to its Web site, is "to highlight important principles in online services and begin important industry discussions around copyright, privacy, and competition."

So far, Microsoft and Burson-Marsteller seem to be the only companies behind the initiative, though Gavin Grant, the U.K. chairman of Burson-Marsteller, said the names of companies and organizations that have signed iComp's online petition should be listed on the Web site by the end of today. Microsoft and Burson-Marsteller were planning to go public with iComp in a few weeks, but published reports broke news of the initiative.

On behalf of Microsoft, Burston-Marsteller has been sending out e-mails for several weeks to companies, organizations, consumer advocacy groups and the like that are interested in "creating a competitive and dynamic online marketplace," Grant said.

Those companies have been asked to review the Web site and to sign a petition based on a set of principles prompted by concerns raised around the Google-DoubleClick deal.

Grant declined to name any of the more than 100 companies or organizations that were contacted, and he said he did not know whether Google was among them. Google did not respond to requests for comment.

Grant did not explicitly say that iComp was formed to block the Google-DoubleClick merger. Microsoft and Burson-Marsteller are interested in fostering a discussion to ensure that the digital marketplace remains competitive, and they hope that other companies and consumer interest groups that have raised concerns about the merger will join them, he said.

However, the iComp petition clearly points to the group's interest in taking a stand against the Google-DoubleClick deal, which opponents claim would give Google control of 80% of the ads served on the Internet.

For example, the first principle on the iComp petition asks signers to agree that "regulators should carefully scrutinize any transactions in the online advertising sector that would create or enhance a dominant market position, substantially reduce existing or future competition, or leave advertisers, online publishers, or consumers with fewer options."

Google announced plans to acquire DoubleClick for $3.1 billion in April, a deal that immediately had competitors and industry groups crying foul over how much of the online advertising market the combined company would own and also how much access to consumer information it would have. U.S. government agencies scrutinizing the deal include the Federal Trade Commission and two congressional committees.

Google has defended itself in blog posts, saying that competitors such as Microsoft, Yahoo Inc. and AOL LLC also are buying up companies to help them boost online advertising and consumer marketing strategies. The company claims that its move to buy DoubleClick has not prevented other companies from competing.

Microsoft doesn't see it that way. In an interview, company spokesman Jack Evans was more willing to voice his company's concern about the merger and to link iComp to Google-DoubleClick opposition, acknowledging that without that merger on the table, there would likely be no iComp.

"Like others, we believe this proposed merger raises serious questions about the future of competition in the online advertising market, as well as about consumer privacy and copyright protection," Evans said.

When asked about Microsoft's own anticompetitive practices, for which the European Commission recently upheld a $613 million fine against the company, Evans said that Microsoft never attempted to purchase a competitor to become a leader in a market, which Microsoft and others believe Google is doing with DoubleClick.

"It's one thing to earn your way into a dominant position in the marketplace; it's another thing to buy your competitors to lock up the marketplace," he said.

Though there are legitimate concerns about privacy and competition to be had over the Google-DoubleClick deal, to some people the formation of iComp might appear to be sour grapes on the part of Microsoft. The company was rumored to be in a bidding war with Google for DoubleClick, hoping to acquire the company to boost its own advertising revenue. Microsoft eventually settled for a $6 billion purchase of interactive digital services firm aQuantive, a deal that closed last month.

And it wasn't so long ago that Microsoft was in the position of being scrutinized for consumer privacy issues surrounding a Web services initiative called Hailstorm. The company in 2001 proposed Hailstorm as a central repository it would maintain for online user identity so Web users would have easy access to their personal information for online transactions. Hailstorm didn't fly with consumers or other companies because no one wanted Microsoft to be the sole owner of people's personal information.

Copyright © 2007 IDG Communications, Inc.

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