Google, AdMob bracing for FTC smackdown

While Google and AdMob continue their efforts to persuade federal regulators to endorse their proposed $750 million merger, The Wall Street Journal reports both companies expect the Federal Trade Commission to block the deal over antitrust concerns. Citing multiple sources close to the situation, the Journal notes that the absence of a clear direction of inquiry by FTC investigators does not bode well for Google and AdMob; sources indicate the FTC could request a preliminary injunction to halt the transaction as soon as this week, although it is more likely the injunction will come down next week.

"The federal government is looking for a way to discipline Google in some way, because of larger concerns about its search power on the web," said one Journal source. "And this is where it looks like it will try to show that concern." Said another observer, "The FTC really wants to do this and is in search of a legal theory that it can win with."

Google announced its intentions to acquire AdMob late last year, stating the mobile ad network's technology would enhance its expertise in the growing mobile ad segment. Industry analysts believe that the combined entity would represent about 21 percent of the U.S. mobile advertising market. Word of the FTC's investigation into the deal first surfaced early last month after the FTC sent letters to AdMob's competitors requesting sworn statements about the potential impact of the acquisition--around the same time, Sen. Herb Kohl (D-Wis.), chairman of the Senate subcommittee on antitrust, sent a letter to the FTC urging the agency to carefully scrutinize the AdMob acquisition and arguing that it "raises important competition issues."

Google CEO Eric Schmidt has cited rival Apple's forthcoming iAd mobile ad effort as proof the segment remains competitive. Fielding questions after a recent speech in front of the American Society of News Editors, Schmidt called iAd "evidence of a highly competitive market," adding: "It just seems obvious to me. I hope [the AdMob acquisition] gets approved."

For more on the ongoing FTC investigation:
- read this Wall Street Journal article 

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