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December 20, 2007

Possible Remedies in Europe's Decision on Google/DoubleClick

The FTC may have OK'd the Google/DoubleClick deal, but just hold your horses. The European Commission has yet to rule on it. The EU regulators have moved their review of the acquisition into stage 2. (That's the blue, or "Guarded" level if you're going by the Homeland Security threat level gauge).

What could it mean for the two firms? Well, for starters, we can expect the European Commission to hear out competitors of Google and DoubleClick, as well as privacy groups. And chances are, they'll consider consumer privacy-related concerns in making their decision; the FTC could base its ruling only on antitrust-related grounds.

OK, so, let's fast-forward a few months and assume, hypothetically, the folks across the Atlantic have approved the acquisition. I spoke with Douglas Lahnborg, antitrust partner at Heller Ehrman last week in preparation for the FTC decision. He told me, even if the deal is green-lighted in Europe, approval could be contingent on the two firms altering their business operations to assuage competition and/or privacy concerns.

That might not be so easy, especially for Internet outfits that are by their very nature global in scope and typically without physical entities or parts they can readily sell off (as, for instance, an auto manufacturer might).

"It can be difficult for companies to put in place remedies aimed at specific jurisdictions if they have global businesses," said Lahnborg. "From a commercial point of view, they may have to roll remedies out on a global level."

Of course, operational changes, known as "behavioral" changes, would require monitoring by the regulatory body, something they may be reluctant to do.

"From the European Commission's perspective, the most attractive remedy is a structural remedy, when you get rid of part of a business," he continued.

Structural components of DoubleClick could be sold, though. Many have raised the Performics SEM business as one that could be shed to remove the inevitable conflicts of interest stemming from the world's largest search ad seller owning a major buyer of search ads.

Performics already has a potential buyer with his hand up. Earlier this month Valueclick Chief Administrative Officer Sam Paisley told the crowd at the UBS Global Media and Communications Conference in NYC the independent ad management firm would be interested in snapping up Performics. "We would want to be on the short list of people" considered for the deal, he said.

Posted by Kate Kaye at December 20, 2007 4:47 PM

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