Google, Microsoft spar before senators

Times Staff Writer

Google Inc. tried to assure senators Thursday that its pending $3.1-billion purchase of online advertising firm DoubleClick Inc. posed no threat to privacy or competition and that consumers would benefit if regulators approved it.

But rival Microsoft Corp. countered that the future of the Internet was at stake, arguing that the deal should be stopped before Google could amass “the largest database of user information the world has ever known.”

Publicly debating the deal for the first time, Google and Microsoft executives sat side by side at a Senate hearing here and engaged in about 90 minutes of controlled sniping befitting their increasingly heated rivalry.

“There will be additional rounds before this heavyweight fight will be settled,” Sen. Herb Kohl (D-Wis.), chairman of the antitrust subcommittee, said afterward.


Congress has no role in approving the deal. That authority lies with the Federal Trade Commission, which launched a detailed review in May. European Union regulators also are looking into the purchase.

But Kohl wanted to bring together executives from Google and from the deal’s most public opponent, Microsoft, to determine the implications.

“This consolidation has profound consequences for all those who use the Internet and for all those who sell products and services on the Internet,” Kohl said.

Microsoft also had been pursuing DoubleClick before Google snapped it up in April, triggering a flurry of deals by competitors. Among them, Yahoo Inc. bought Right Media for $680 million and Microsoft bought AQuantive Inc. for $6 billion.


Those investments show that the online advertising market is competitive and that consumers and public officials have nothing to fear from the DoubleClick deal, said David Drummond, Google’s senior vice president of corporate development and chief legal officer.

“The market believes this space has a lot of room for growth,” he said Thursday.

As often happens when technology executives try to explain their businesses to Congress, Drummond used an analogy to try to show that Google and DoubleClick were not competitors -- and that therefore combining them posed no antitrust problems.

Google primarily sells targeted text ads on its Web search results and on other sites, he said, and DoubleClick provides technology that places large display ads on websites and tracks who views them.

“Google is to DoubleClick what, say, Amazon is to FedEx,” Drummond said. “Amazon sells books. FedEx delivers them. And by analogy, we sell ads, DoubleClick delivers ads. Two different businesses.”

Microsoft General Counsel Bradford L. Smith disagreed, saying Google and DoubleClick compete to deliver ads. As evidence, he displayed a large photo of a Web page from the Friendster social networking site that showed a display ad delivered by Google’s AdSense service -- right above an ad provided by DoubleClick.

“I think a better analogy is this: Google is already Amazon and is already FedEx,” he said. “Now, they’re proposing to buy the post office.”

Drummond said Google did serve some ads, but its customers wanted it to do more. That’s why it’s trying to buy DoubleClick.


Smith also raised concerns about the privacy of data collected from Internet users by Google and DoubleClick, asking whether the merger would “create a whole new meaning to the term ‘being Googled.’ ”

Microsoft was joined in its privacy worries by Marc Rotenberg, executive director of the Electronic Privacy Information Center. The advocacy organization and some other public interest groups last spring asked the FTC to review the deal. Rotenberg testified Thursday that conditions must be attached to the deal’s approval to safeguard consumer privacy.

Drummond said that Google was committed to protecting the information it collects, and that it was looking into new technologies for keeping data anonymous, such as breaking it into pieces that are harder to identify.

But Drummond said after the hearing that it would not be appropriate for the FTC to place restrictions on the deal.