Earlier this year, AdLaw By Request wrote on the merits, concerns and overall likelihood of success of the Google / AdMob transaction that closed toward the latter part of 2009, pending the Federal Trade Commission’s (FTC) sign-off. Predicting (or perhaps foreshadowing) that the FTC would raise antitrust concerns over the pending transaction, Google went as far as creating a website entirely devoted to educating and explaining (i.e., swaying) to both the FTC and the public at-large why the acquisition of AdMob by Google should not be construed as anti-competitive.

Give Google props for a nose that knows… The FTC appears to be laying the groundwork for an antitrust challenge. Between assembling its A-Team of FTC litigators and asking several of AdMob’s competitors to testify under oath about the impact this prospective consolidation would have on the mobile advertising market, the FTC seems ready for the challenge.

The concern, again, is the potential dominance Google would have over both web and mobile advertising. AdMob is a leading supplier of graphic ads (essentially, an ad network) that run across more than 150,000 different mobile sites and applications within its network. AdMob was also among the first companies to sell ads that appear in mobile applications, such as games. By folding the AdMob mobile ad market share into Google’s existing business, the FTC is clearly concerned that Google would capture another front on the digital advertising landscape.
Earlier this week, Sen. Herb Kohl (D-Wis.), Chairman of the Senate Subcommittee on antitrust, wrote to the FTC, urging the agency to closely scrutinize the deal as it “raised important competition issues.” In contrast, Google continues to assert that the mobile advertising space is still in its infancy, and no one can predict if any single company will dominate it. In addition, Google points to Apple’s somewhat recent acquisition of Quattro Wireless, as evidence that the mobile advertising market has many players of varying sizes.

In an interesting twist to this developing story, the CEO of 4Info, Zaw Thet, sent a letter to the FTC claiming Google’s acquisition of AdMob would not impact his company’s ability to compete in the mobile space. 4Info is a direct competitor of AdMob, and considered by many to be the largest, or among the largest, mobile ad networks in the United States. Mr. Thet wrote in his letter to the FTC that he has “no concerns about my [4Info’s] ability to continue to compete effectively after the transaction closes.” He further comments that it will be “easy for me [4Info] to partner with large brand advertisers who wish to advertise on mobile devices and publishers who wish to monetize their mobile content.”

Why This Is Important:  While mobile advertising is still relatively small ($416 million spent on mobile advertising in 2009, as compared with approximately $24 billion for online advertising during that same period, according to eMarketer), many believe mobile advertising will explode over the next several years. In fact, many analysts predict that more people will run searches on their mobile devices than PCs in the not-too-distant future, and that ad revenues from mobile advertising will similarly surpass those of PCs. Hence, the decisions made today by the FTC, Congress, and even the mobile advertising industry-at-large, will likely have long-standing implications in the not-to-distant future.