Google-DoubleClick merger brings EU into uncharted territory
The proposed acquisition of online advertising company DoubleClick by Google, the Internet search giant, raises a host of privacy concerns that make the merger more than a mere competition case, legal experts have said.
The concentration of consumer data is not only a competition issue but also raises significant privacy concerns, according to participants at a round table organised by Pappas & Associates, a Brussels law firm, on 10 January.
Google is by far the most-used search engine in the EU and throughout the world. But while other Internet search engines like Ask.com allow users to delete personal information, Google does not propose such features, raising concerns about the protection of Internet users' personal data.
The way search engines use such data will be the subject of an opinion to be published in February by the Article 29 Working Group which brings togheter the national Data Protection Authorities. The European Data Protection Supervisor (EDPS), the EU advisory body, has limited itself to saying that more transparency was needed in dealing with personal data collected by search engines.
Although debate over privacy concerns is becoming increasingly heated in Brussels circles, the average European citizen does not seem particularly concerned by the issue of data protection, surveys show.
Google notified the Commission in September last year of the planned $3.1 billion (€2.2 billion) takeover, negotiated in spring 2007. DoubleClick is the global leader in graphic online ads, while Google dominates the market for text-based internet advertising. The ads are tailored to each individual user using the data collected by Google while people use its search engine or surf the web with its toolbar installed.
Last December the Federal Trade Commission (FTC), the top US anti-trust authority, announced that it will not seek to block Google's acquisition. The authority took note of the privacy concerns related to the case but considered them "not unique to Google and DoubleClick".
The European Commission decided in November to open an in-depth investigation to verify the effects produced by the operation to the markets for intermediation and ad serving in online advertising. The deadline for the decision was designated 2 April 2008.
Eliana Garces Tolon, a member of the Cabinet of Meglena Kuneva, EU Commissioner for consumer protection, spoke at the round table. She wondered how far the use of personal data can go and how much it might affect consumer choice.
"In the Google case, to what extent can the private data can be used for commercial interests in a way that distorts your choice?," she asked. "I don't think DG Competition has an answer to this question," she said.
An official at the Commission's competition DG participating at the meeting replied: "On privacy issues it is up to the member states to take decisions. On competition, we decide because it is our task. Do you think the Commission can stop a deal only on the basis of privacy?"
Denise Kingsmill, a member of the UK House of Lords and former deputy chairwoman of the British Competition Commission, underlined that the merger is more than a competition issue and that, in any case, the material value of personal data had to be taken in account in assessing the merger. "It seems DG Competition does not do it," she commented.
As a solution, she suggested the introduction of universal access to data. Google and DoubleClick can merge, she argues, but only if they avoid putting together their databases or make them accessible to all the competitors.
Advertisers tend to highlight the importance of targeted online ads as a way to better reach the consumer. Malte Lohan, of the European Action of Group of the World Federation of Advertisers, said: "Today more ads do not help to sell more". The focus on targeted ads clearly favours the collection of personal data to the benefit of advertisers, they argue.
However, for consumer groups, the merger poses a real threat to privacy and consumer interests. "The online advertising market will be placed in jeopardy if the Google/DoubleClick merger is allowed to proceed, because the combined company will dominate both major 'pipelines' for online advertising – both the pipeline for search ads and the pipeline for non-search ads", reads a letter sent to the Commission by BEUC, the European consumers' organisation.
All the big competitors in the online advertising market, such as Microsoft and Yahoo!, are clearly against the merger, and so are Internet content providers such as newspapers, who fear the merger will make their space less attractive to advertisers.
"By combining the dominant network for sales of online advertising with the dominant provider of ad-serving tools, Google will obtain dominant control over the 'pipeline' for online advertising", Microsoft wrote in a document.
"If the merger goes ahead, it will affect the whole content producers' sector. It is not a problem only for the direct competitors such as Yahoo! or MSN", said Margaret Boribon, Copiepresse secretary-general. The organisation, which represents Belgian Francophone and Germanophone newpapers, has already won a legal battle against Google concerning its news service, Google News (EurActiv 27/3/2007).
- 21 Jan. 2008: Public seminar on "Data protection on the Internet" hosted by the European Parliament's Committee on Civil Liberties, Justice and Home Affairs.
- Feb. 2008: Article 29 Working Group expected to issue an opinion on the use of personal data by Internet search engines.
- 2 Apr. 2008: Provisional deadline for the Commission's decision on Google-DoubleClick merger.