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Google Ready To Rumble If FTC Sues Over AdMob

In November, 2008 the US Department of Justice was prepared to sue Google and call the company a “monopoly”  in an effort to stop the proposed search-ads deal with Yahoo. At the time Google wanted to avoid the “m-word” and didn’t quite have the stomach for a public legal battle with the DOJ. Here’s what General Counsel David Drummond said at the time:

However, after four months of review, including discussions of various possible changes to the agreement, it’s clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn’t have been in the long term interests of Google or our users, so we have decided to end the agreement.

Yahoo responded with a statement of public disappointment that Google wasn’t willing to fight for the deal in court:

Yahoo! continues to believe in the benefits of the agreement and is disappointed that Google has elected to withdraw from the agreement rather than defend it in court.

Cut to not quite two years later and the Federal Trade Commission (FTC) review of Google’s proposed $750 million acquisition of AdMob. While the various legal minds and powers that be at the FTC consider whether to try and formally block the GoogMob acquisition — all indications have been that the agency is gearing up for that move — Google is prepared to fight this time.

According to an interview with Reuters, Google CEO Eric Schmidt indicated that the company would fight in court for the right to acquire the company:

In an interview with Reuters Insider, Schmidt was asked what Google would do in the event of the Federal Trade Commission (FTC) suing to block the deal.

“We’re likely to fight very hard,” he said. “It’s a very strategic acquisition for Google.”

As Schmidt says, this new harder line reflects the strategic importance of AdMob to Google. Then there’s the little matter of the $700 million “kill fee” that Google will reportedly have to pay to AdMob if the deal doesn’t happen. These twin motivations represent both carrot and stick for Google.

Google also recognizes, unlike in 2008, that this is not a “one off” — any significant “strategic” acquisition is likely to meet with comparable opposition from regulators in the future. The company is thus communicating it’s prepared to resist efforts to corral and curtail its ambitions going forward. With this declaration the stakes just got higher.

While not an anti-trust attorney my sense is that the FTC would have some difficulty proving its case in court. Without going into the details of the mobile market again, this would be no guaranteed victory for the agency and the US government. Of course the lawyers at the FTC recognize that and are probably weighing the likelihood of success as one of the considerations in bringing the action.

In addition to an assessment of the merits of the government’s position, the other “intangible” calculation probably going on at the FTC is how a potential loss in a very public case would affect the involved government lawyers’ reputations and careers.

In publicly stating that it’s willing to fight “very hard” Google has called the agency’s “bluff” (metaphorically speaking). Now we’ll see whether the FTC is willing to move ahead and file the action.

Cue the music.

Opinions expressed in this article are those of the guest author and not necessarily Search Engine Land. Staff authors are listed here.

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