Lenard & Rubin on Google-DoubleClick

by on August 22, 2007 · 2 comments

My boss Tom Lenard of PFF penned an editorial for the Wall Street Journal yesterday about the Google-DoubleClick deal. The essay was co-authored by Paul Rubin, a PFF adjunct fellow and a professor of economics and law at Emory University. Lenard and Rubin argue that the fears about the Google-DoubleClick deal have been overstated:

Those who complain about Google’s purchase of DoubleClick make two claims. Both are flawed. The first argument is that, since both firms have a large market share of their respective spheres, a merger would be monopolistic. The flaw is that the two companies undertake activities that don’t overlap. Google places text ads mainly on its own Web sites and search-result screens. DoubleClick delivers display ads from advertisers to Web sites. It creates no ads and controls no Web sites. Even if we believe that Internet advertising is a distinct market (debatable, since it comprises only about 5% of all advertising) the combined firms will not gain any market power since they do not have any business in common.

The second argument comes from privacy advocates who have filed a brief with the FTC. They say the merger “could impact the privacy interests of 233 million Internet users in North America.” The FTC’s antitrust function and its consumer protection function are fundamentally different. Indeed, the more information markets have, the more competitive they are. If “privacy” advocates have their way, there would be less information and markets would not work as well.

Marketers use information. Some people have a cockeyed notion that if this information benefits marketers, it is to the detriment of consumers. Wrong. Consumers benefit when marketers provide them with information about products, especially new products, that they may want. A free flow of information enabling more efficient “targeting” of consumers is to their advantage.

They go on to conclude that: “Both the antitrust and the consumer protection branches of the FTC should leave this acquisition alone. It will create benefits with no increase in market power and no harmful reduction of privacy.” Read the entire piece here.

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