Tuesday, May 4, 2010

What people are telling the FTC about Google-AdMob



We’ve been talking with the Federal Trade Commission for the past six months about our planned acquisition of mobile advertising start-up AdMob, which we believe will bring new innovation and competition to mobile advertising. We’ve told the FTC about how new and highly competitive the mobile advertising space is, and the FTC has been talking to others in the industry about their views as well.

Some of those folks are sharing what they told the FTC. The developers of a mobile app called Wertago said they told the FTC that:
The internet and mobile technology sectors right now are perhaps the most (or among the most) competitive and fast-moving industries EVER TO EXIST. The web and mobile spaces have remarkably low barriers to entry. [...] And we think Google’s AdMob acquisition will have little if any effect on the competitiveness of the mobile advertising market space.
Wertago also talked about both the low entry barriers and non-existing switching costs in mobile advertising:
The crucial point here is 1) the marginal advertiser and the marginal developer, not the average or typical advertiser and developer, are who drive the competition, and there will always be a fight for them, especially because of the “long-tail” where lots of niche opportunities exist, and 2) the cost of switching ad networks in a mobile app is close to zero, and the cost of developing an ad network is not terribly high and easily bankrolled.
Industry analyst Greg Sterling also met with the FTC, and said that he told them:
I didn’t believe competition would be affected adversely and that advertising prices were not likely to go up. Indeed, mobile CPM prices have been falling in mobile. In short I said, yes Google becomes more powerful and effective but the deal doesn’t stifle competition. The market is dynamic and highly competitive, I told the FTC.
And:
I’m no laissez-faire capitalist but I think the mobile ad market is both very young and highly dynamic. It’s evolving quickly and definitely very competitive. If the objective of anti-trust law is to protect competition in the market then it is simply unnecessary for the FTC to intervene at this stage by blocking the AdMob deal.
Other analysts and observers have been weighing in too:
With Google and AdMob facing strong competition every day from businesses like Apple, JumpTap, Millennial Media, Microsoft, inMobi, Greystripe, Mobclix and many more, we agree that there’s vibrant competition in this space.

Update (5/5): Dow Jones asked a few players in the mobile industry yesterday what they thought about the deal:
Two of these people said the FTC staff didn't appear to be taking into account other companies like Millennial Media Inc., Greystripe Inc. and Jumptap Inc., all of which operate in-application advertising networks. By a broader definition, the mobile advertising market also includes corporate behemoths such as Yahoo Inc. (YHOO) and Microsoft Corp. (MSFT), which serve ads displayed on mobile websites.[...]

Industry insiders and analysts said an FTC antitrust challenge would be problematic for a number of reasons. One industry source argued that it was a "flawed theory" to distinguish between ads that appear within mobile-phone applications and those displayed on mobile websites. This person said the mobile-advertising market is at such an early stage that it is impossible to predict which companies will emerge on top.

Michael Chang, chief executive at Greystripe, acknowledged that the combination of Google and AdMob would create a stronger rival, but he agreed that the market is too new and too dynamic to predict how it will evolve.

"It definitely creates a stronger competitor, but we're in the second inning and it's going to be a long game," said Chang.

5 comments:

Appitalism said...

Some of the data that shows why the proposed AdMob deal should be blocked can be seen at www.Appitalism.com/blog

Together you'll have both sides of the case

Thanks for allowing comments

The True Be said...

If Google got this deal, it will block all the other competition. For sure Google will not stop other companies to have similar services, but NO ONE will be able to do it like Google and their odds will be much fewer than Google. That's why the FTC is blocking the deal

Borat said...

Google should definitely be allowed the acquisition. Apple is launching its own ad platform and proposed fees are far higher than existing ones by other network owners.
Doesn't this discriminatory pricing by Apple suggest that they feel that they have monopolistic control over the market than the other network operators ?
Or it could merely be the characteristic of a nascent market where the players are still trying to determine optimum pricing.

supertommy said...

I have no idea why the FTC is reviewing this at all.

A trust would not exist and cannot whether Google purchases AdMob or not. Google would need to buy every company like AdMob and then somehow, by magic I suppose, stop anyone else from entering the market while raising prices. This is an economic impossibility.

Scr3wlo0se said...

if the FTC blocks this it will only make it even harder for small startup companies to compete with the large corporations. Which is why the FTC is even investigating this in the first place. No small startup can afford to work with multiple companies to advertise across web, mobile and tv. Google is working to continue to provide the best cross platform advertised service too small and startup businesses as they always have at a price that levels the playing field.