WASHINGTON -- In approving Google Inc.'s $3.1 billion purchase of DoubleClick Inc. yesterday, federal regulators determined that there was plenty of competition in the fast-growing Internet ad world.
But they also expressed concerns about consumer privacy in that rapidly evolving marketplace, where companies are increasingly using technology to track people's digital footprints in order to follow them around the Web and target ads to their activities.
The Federal Trade Commission voted 4-1 to allow the deal, announced in April, without any conditions, arguing that the two companies were not focused on the same parts of a Web advertising market that's expected to generate $28 billion in revenue next year. Google still needs approval from the European Union to complete the acquisition.
Google competitors, particularly Microsoft Corp., had lobbied hard against the deal, complaining that adding DoubleClick's online advertising technology and customer base would give the search giant an insurmountable lead in Internet advertising.
The FTC dismissed those concerns, as well as requests by privacy groups that it block the deal or enact restrictions to protect consumer data.
"Not only does the commission lack legal authority to require conditions to this merger that do not relate to antitrust, regulating the privacy requirements of just one company could itself pose a serious detriment to competition in this vast and rapidly evolving industry," the FTC majority said in a statement.
Commissioner Pamela Jones Harbour dissented, saying the FTC should have addressed the significant privacy and competition concerns.
"The truth is, we really do not know what Google/DoubleClick can or will do with its trove of information about consumers' Internet habits," she wrote in her dissent. "The merger creates a firm with vast knowledge of consumer preferences, subject to very little accountability."
Although the commission approved the deal, its members were concerned enough about the advertising practice known as behavioral targeting that they released a set of proposed privacy guidelines for the industry.
Consumer advocates offered modest praise for the move.
"The FTC recognized that behavioral advertising poses a menace to consumer privacy and that the business model may be inherently unfair," said Ed Mierzwinski, federal consumer program director at U.S. Public Interest Research Group.
But the FTC's actions weren't enough for some privacy groups, who fear the ramifications of adding DoubleClick's data to the storehouse of information that Google collects from its search engine and advertising programs. Those groups hope that more consumer-friendly regulators in Europe will enact restrictions, which some analysts said was possible.
The European Commission is expected to rule on the merger by April 2.
Privacy advocates took solace that the deal had raised public awareness of behavioral advertising.
Jim Puzzanghera and Joseph Menn write for the Los Angeles Times.