Google closes $3.1 billion DoubleClick deal European decision disappoints privacy, consumer advocates

** FILE ** The logo of Google, seen on the front door of the new Google Engineering center in Zurich, Switzerland, in this March 6, 2008 file photo. Google Inc. on Tuesday, March 11, 2008 said it has taken control of online ad service DoubleClick Inc., completing a deal that the Internet search leader announced 11 months ago. (AP Photo/Keystone, Walter Bier, file) less ** FILE ** The logo of Google, seen on the front door of the new Google Engineering center in Zurich, Switzerland, in this March 6, 2008 file photo. Google Inc. on Tuesday, March 11, 2008 said it has taken ... more Photo: Walter Bieri, AP Photo: Walter Bieri, AP Image 1 of / 3 Caption Close Google closes $3.1 billion DoubleClick deal 1 / 3 Back to Gallery

European regulators approved Google Inc.'s $3.1 billion acquisition of online advertising giant DoubleClick on Tuesday, removing the last major obstacle for a deal that critics said would hobble competition and violate consumer privacy.

The decision by the European Commission allowed Google to immediately close the merger, which was announced nearly a year ago.

By combining forces with DoubleClick, Google is significantly bolstering its formidable online advertising business.

Already a juggernaut in search engine advertising, Google's acquisition also makes it the leader in placing banner ads on third-party Web sites.

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"We are thrilled that our acquisition of DoubleClick has closed," Eric Schmidt, Google's chief executive, said in a statement.

In a subsequent blog posting, Schmidt raised the possibility of job cuts in the United States and elsewhere as part of the integration of the two companies and said a decision will be made in early April. DoubleClick, whose operations are based in New York, has about 1,500 employees.

Consumer advocacy groups, along with rival Microsoft Corp., launched an intense lobbying campaign to try to torpedo the acquisition out of fear that it would create an Internet colossus that could muscle out competition. Some argued that the marriage would also allow Google, based in Mountain View, to collect too much information about the online habits of Internet users.

European regulators rejected those arguments, saying "the transaction would be unlikely to have harmful effects on consumers" or competitors. Commissioners noted that advertisers have several alternatives to Google, including Microsoft, Yahoo and Time Warner Inc.'s AOL division.

Regulators looked primarily at the business impact of the Google-DoubleClick merger but added that the combined company must follow laws on privacy protection and the collection of personal data.

The decision by the European officials echoes the conclusion of the U.S. Federal Trade Commission, which conducted its own review. The commissioners voted 4-1 in December to approve the merger after determining that it did not raise antitrust concerns and that competition in the Google-DoubleClick market is "vigorous and likely to increase."

Jeff Chester, executive director of the Center for Digital Democracy, a consumer group that opposed the merger, was disappointed the acquisition was approved. In addition to antitrust concerns, he had raised fears about Google compiling increasingly detailed dossiers about its users' Internet habits and said the DoubleClick merger would give it access to even more information.

"Antitrust regulators have shot consumers and competitors in the digital foot here by allowing Google to become an even more powerful No. 1," Chester said. "It's very likely that in two or three years well look back at this decision and throw up our hands and say 'What have we done here?' "

Google's merger proposal last year sparked a wave of consolidation in the Internet advertising industry. Microsoft bought aQuantive; Yahoo acquired BlueLithium and the part of Right Media that it didn't already own; and AOL acquired several smaller Internet advertising players.

Still hoping to play catch up, Microsoft has proposed an unsolicited $44.6 billion acquisition of Sunnyvale's Yahoo. Although its bid was rejected, Microsoft is still trying to consummate a deal.

Liz Ross, president of Tribal DDB West, an online advertising firm, said the Google-DoubleClick merger will benefit advertisers by allowing them to better target their advertising to users. She was unconcerned about Google becoming too powerful in online advertising in the wake of the DoubleClick acquisition, although she said that its only major competitor now is Microsoft.

"From our perspective, it's good," Ross said. "The bond of trust between marketers and consumers to deliver the right message at the right time has been broken for some time."