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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2731

Privacy Worries GoogleClick: One, Privacy Advocates: Nil

Andy Greenberg

After a tortuous, eight-month process, the Federal Trade Commission voted 4-1 Thursday to approve Google's plan to acquire DoubleClick, a $3.1 billion deal. For the privacy advocates who have opposed the merger, however, the long debate continues.

"The bottom line is that the FTC failed to address the privacy implications of the Google-DoubleClick merger," charges Marc Rotenberg, who argued before the Senate in September that the deal should be blocked until Google (nasdaq: GOOG - news - people ) made privacy-related concessions. "The problem isn't going away."

The FTC's analysis of Google's buyout plans focused primarily on whether the combined company would threaten competition in online advertising. Thursday's decision from the commission echoes Google's argument that the search giant's text-based advertising business is fundamentally different from DoubleClick's offerings of larger banner ads, making the deal a harmless vertical integration of businesses, not a horizontal monopoly.

But privacy advocates have used the FTC-initiated debate as a platform to point out that the deal could mean a more powerful aggregation of private data in the hands of a single company. A combined Google/DoubleClick could potentially merge Google's enormous wealth of search data with DoubleClick's data on how users behave on individual Web pages. Together, that store of information could help Google better track and analyze users' paths around the Web. And, independently of what that means for competition in the industry, privacy advocates contend putting the control of such data into the hands of one company could lead to serious invasions of privacy online.

"We believe the commission has failed to fulfill its obligations to the public," the Electronic Privacy Information Center said in a statement following the decision. "A majority of the commissioners chose to ignore the privacy implications of the Google-DoubleClick merger, and to propose instead the same self-regulatory approach to privacy protection that has repeatedly failed American consumers."

Google Chief Executive Eric Schmidt defended the deal's privacy implications. "For us, privacy does not begin or end with our purchase of DoubleClick," he said in a statement. "We have been protecting our users' privacy since our inception, and will continue to innovate in how we safeguard their information and maintain their trust."

"The FTC clearance decision reaffirmed the law by noting that privacy concerns played no role in its merger review," Google Chief Legal Officer David Drummond wrote in a blog post on the company's site. "This is an important principle, as privacy issues need to be addressed on an industry-wide basis, and not on a company-by-company basis."

But the real problem may be that there is no explicit way for the government to review the personal privacy implications of a corporate merger. The Sherman Antitrust Act, the cornerstone of the antitrust reviews undertaken by both the FTC and the U.S. Justice Department, was created in 1890 to limit the formation of monopolies that might unfairly raise prices for consumers. No comparable legislation exists to weigh the privacy implications corporate mergers may have for consumers.

"We have an antitrust review about mergers. It's not about privacy," says Ed Black, president and chief executive of the Computer & Communications Industry Association. Privacy issues, he says, don't have "a natural place in a merger, from a competitive standpoint."

Among the FTC's commissioners, Pamela Jones Harbour cast the only vote against the merger, saying the combined entity would pose an anticompetitive threat because it could present the largest consumer database for advertisers.

Harbour also raised privacy issues. "The truth is, we really don't know what Google/DoubleClick can or will do with its trove of information about consumers' Internet habits," Harbour wrote. "The merger creates a firm with vast knowledge of consumer preferences, subject to very little accountability."

Harbour wasn't the only commissioner to mention the issues. A document included in the commission's decision describes industry-wide problems associated with combining search data and online behavioral tracking information. Google and DoubleClick, after all, aren't alone in their quest to grab up more of users' private data. Microsoft (nasdaq: MSFT - news - people ), which has vocally opposed Google's DoubleClick acquisition, acquired its own behavioral tracking ad firm, aQuantive (nasdaq: AQNT - news - people ), last May. Yahoo!'s (nasdaq: YHOO - news - people ) buyout of ad firm Right Media in April has also spooked some privacy advocates.

In response to these broader privacy problems, the commission outlined a series of self-regulatory recommendations for online ad companies. Those measures include warning consumers about data collection, allowing users to opt out of data collection, and imposing limits on the length of time that private data can be stored.

But those recommendations don't carry the weight of law--nor are they underscored with specific penalties. That makes them mostly just finger wagging, argues Jeff Chester, the executive director of the Center for Digital Democracy. "We do need to have overall industry safeguards," he says. "But when the world's leading search engine marketing company wants to combine with the world's leading provider of behavioral tracking for the majority of Web sites, a unique response is required."

Chester and other privacy advocates still hope a European Union investigation into the deal's anti-competitive and data-collection issues will squeeze more explicit privacy safeguard concessions from Google and DoubleClick. The E.U.'s trade regulators voted in November to extend their investigation of the merger until Jan. 21, when it plans to make a final decision.

"Hopefully, the European commission will laugh when it sees this FTC ruling, and impose its own conditions," says Chester.

--Wendy Tanaka also contributed to this report.

Courtesy: Forbes.com

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