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Google’s $750 million acquisition of AdMob, the fast-growing mobile-advertising startup, appears to be running aground in Washington, D.C. Antitrust regulators at the Federal Trade Commission have reportedly given the deal more time for a review. Some mobile developers, though, are raising questions about the FTC’s review process and asking whether Google’s getting a fair shake.
The deal is unquestionably contentious: Google, the dominant player in online advertising, is seeking to expand its presence with AdMob, one of the top mobile-advertising networks. (Estimates of AdMob’s market share vary wildly but range as high as 62 percent.)
But VentureBeat has spoken with several developers who say FTC investigators who contacted them about the deal seemed to have their minds made up.
Will Price, CEO of WidgetBox, a San Francisco-based rich-media advertising startup, said that when an FTC investigator contacted him, he expressed his view that the mobile-advertising market is far from mature and that blocking the deal could harm an emerging industry. But he’s not sure he was heard.
“There’s a bit of a subtext, an agenda that comes across when talking to them,” said Price. According to Price, the FTC later sent him a transcript which omitted most of his views favoring the Google-AdMob deal and asked him to sign it and swear to its accuracy. Only after he protested did they send a more complete transcript for him to sign.
Ameet Shah, cofounder of Toronto, Canada-based Five Mobile, reported a similar experience. “It seemed strange, like I was being led to an already-defined conclusion,” he said. “They were definitely looking for reasons to investigate further.”
Are politics at play? The White House is often portrayed as being close to Google, a company Barack Obama praised as a presidential candidate. He assiduously courted the YouTube audience and even hired some Googlers, such as Katie Stanton, who’s now working in the State Department.
But Google’s growing dominance of search and online advertising — and through it, the future of media — has alarmed the government’s antitrust cops. Before her appointment as the head of antitrust enforcement at the Department of Justice, Christine Varney characterized Google as an antitrust “problem.”
That philosophy may be a factor in the government’s AdMob investigation.
“It seems like the FTC’s interest here in terms of Google seems to be much larger than this AdMob deal,” said Five Mobile’s Shah. “They’re more concerned with Google as a whole.”
The developer community is divided on the deal. Simon Buckingham, who writes a blog about mobile apps called Appitalism, has raised a number of questions about a combined Google-AdMob’s dominance of the field. But the concern expressed by some developers is whether the FTC is getting a full picture of opinions about the deal in the market — or if it’s even interested in doing so.
Shah also said the FTC personnel he spoke to didn’t seem familiar with mobile business models — like the fact that many apps, instead of relying on advertising revenues, offer free versions and entice users to upgrade, the so-called “freemium” business model. The Google-AdMob deal would presumably have no effect on such developers, Shah pointed out. “My feeling was that the people I was speaking to did not have enough information to make a decision,” said Shah.
Widgetbox’s Price concurred: “The idea that [FTC investigators] understand this market well enough to make a decision strikes me as absurd.”
Hence, perhaps, the decision to extend the deal’s review period. The Google-AdMob deal may still go through. Apple’s acquisition of AdMob competitor Quattro Wireless certainly helps Google’s case. And Google, for one, is publicly displaying the Googleplex’s trademark sunny optimism.
“We’re continuing to talk with the FTC about our acquisition of AdMob,” said spokesman Adam Kovacevich. “We’re confident that they’ll conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes.”
And if it does? Then questions will linger about the FTC’s aggressive stance in its investigation — and whether the next Google deal will proceed like an inquiry — or a witch hunt.
[Photo: Matija Grguric]