Why the FTC Should Keep Its Hands Off Google

For a company that's as big and dominant as Google (Nasdaq: GOOG  ) , I guess regulatory scrutiny is as inevitable for it as death, taxes, and horror movie remakes are for the rest of us. But just because a company's become a giant doesn't mean this scrutiny always makes sense, as shown by the FTC's hostility toward Google's planned acquisition of wireless advertising network AdMob.

Bloomberg reported over the weekend that the FTC's staff is urging its bosses to file an antitrust suit to prevent a Google-AdMob deal from happening. On a very simple level, the staff's opposition seems logical: Google is the undisputed colossus of the online advertising world, and AdMob runs the world's biggest independent mobile ad network, so combining the two companies might be bad for competition, right?

If the world of mobile advertising looked anything like the traditional, PC-driven online advertising market, then maybe this line of thinking would hold up. But it's already looking like a completely different animal, one in which phone manufacturers and wireless carriers arguably have as much clout as search engines and ad networks. The same Bloomberg article that broke the story of the FTC's opposition also quoted an IDC analyst's estimates of Google and AdMob holding 21% of the U.S. mobile ad market between them in 2009. A decent number, but hardly dominant, especially for Google and AdMob's home turf.

Meanwhile, Steve Jobs is making it clear that, AdMob or no AdMob, Apple (Nasdaq: AAPL  ) plans on giving Google a major run for its money with its iAd network for iPhone, iPod Touch, and iPad apps. According to a report from the Wall Street Journal, Apple plans on charging premium pricing for iAd placements, with advertisers having to commit to $1 million in spending to be among the first companies running on the platform, and $2 being paid out every time a user interacts with an ad.

That kind of behavior gives the impression of a company that's confident about being a major player in mobile advertising, not one that will be fighting for scraps left behind by a Google-AdMob juggernaut.

Microsoft (Nasdaq: MSFT  ) is also refusing to cede the mobile ad market to Google without a fight. The company hammered out a deal last year to become Verizon's (NYSE: VZ  ) default search provider. Motorola (NYSE: MOT  ) , one of the biggest backers of Google's Android operating system, cut a search deal of its own with Microsoft in March (ironically enough). And AT&T (NYSE: T  ) has long had a search partnership with Yahoo!.

With so many carriers and phone manufacturers happy to march to their own beat when it comes to wireless search and advertising, Google's purchase of AdMob doesn't resemble an attempt to monopolize a young market as it does an attempt to maintain a healthy position in a business that's quickly gotten very competitive. Hopefully the FTC realizes this as well, rather than doing Apple and Microsoft an undeserved favor.

Fool contributor Eric Jhonsa has no position in any of the companies mentioned. Microsoft is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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