Executives from Google and Microsoft are scheduled to testify before a Senate panel this week on the search engine company's planned US$3.1 billion acquisition of online advertising company DoubleClick.
In prepared testimony already posted online, Google's chief legal officer, David Drummond, says Google's acquisition of DoubleClick will benefit consumers, promote free speech and help in the success of small businesses. Drummond is due to testify before the Senate Judiciary subcommittee on Antitrust, Competition Poicy and Consumer Rights.
"In our experience, our users value the advertisements that we deliver along with search results and other Web content because the ads help connect them to the information, products, and services they seek," the testimony stated.
Drummond says offering information to consumers in the form of relevant advertising is useful because it complements the subjects of their searches.
Drummond also says Google is confident that its purchase of DoubleClick doesn't raise antitrust issues because the two companies don't compete with each other, and are complementary businesses.
"DoubleClick does not buy ads, sell ads, or buy or sell advertising space," he says in his testimony. "All it does is provide the technology to enable advertisers and publishers to deliver ads once they have come to terms, and provide advertisers and publishers statistics relating to the ads."
He says Google's acquisition of DoubleClick doesn't stop other companies from continuing to compete in the online advertising market.
As to the issues raised by privacy groups, Drummond says Google believes in protecting the privacy of its users online and the company is working to update its privacy practices and policies, which he said does not begin and end with its purchase of DoubleClick.
"We make privacy a priority because our business depends on it," he says in the testimony. "If our users are uncomfortable with how we manage the information they provide to us, they are only one click away from switching to a competitor's services. User interests effectively regulate our behavior, and user trust is a critical component of our business model."
Microsoft, which opposes the deal, is also bringing out its big gun to testify.
"If Google and DoubleClick are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising," said Brad Smith, Microsoft's senior vice president and general counsel says in prepared testimony.
While the merger will result in higher profits for Google, it will be bad for everyone else, including publishers, advertisers and users, because it will reduce competition, Smith says in his testimony.
Smith also questions the antitrust and privacy issues of giving Google sole control over what he says is the largest database of user data in the world. "Online ads are served based on user data. As consumers we give up this data - though often without knowing it - in exchange for access to free content and services," he said. "... [W]ith this merger, Google seeks to record almost everything you see and do on the Internet and use that information to target ads. One question is whether this merger will create a whole new meaning to the term "being googled."
In his blog, Scott Cleland, president of Precursor, and who is also due to testify this week, points to a recent antitrust analysis of the proposed merger that seems to discredit Google's defense that the two companies are not competitors.
Cleland said the study suggests that DoubleClick customers think Google and DoubleClick compete against each other. The study is titled "An Antitrust Analysis of Google's Proposed Acquisition of DoubleClick," by Robert Hahn, director of the AEI-Brookings Joint Center for Regulatory Studies, and Hal Singer, president of Criterion Economics.