Google argued its privacy and competition case before regulators on Thursday. The search king hopes to convince the government its pending $3.1 billion purchase of online advertising firm DoubleClick won't harm consumer interests.
Microsoft put in its two cents to persuade regulators to put the kibosh on the deal. The software giant argued that the Internet's very future is at stake. Microsoft claims that approving the deal would open the door for Google to collect "the largest database of user information the world has ever known."
Thursday's hearings mark the rival firms' first public debate on the issue, though the drama has been playing out in the media for many months. Google and Microsoft executives might have been sitting together at the same Senate hearing, but their stances on the pending deal were anything but similar. The companies argued for about 90 minutes.
David Drummond, Google's senior vice president for Corporate Development and Chief Legal Officer, testified before the Senate Judiciary Committee. He focused on the general benefits of online advertising, including promoting free speech and helping small businesses succeed. Google's acquisition of DoubleClick, he claimed, will help advance those benefits while also protecting consumer privacy and enabling greater innovation, competition, and growth. Next, he turned to the antitrust concerns Microsoft and others have voiced.
"We are confident -- and numerous independent analysts have agreed -- that our purchase of DoubleClick does not raise antitrust issues because of one simple fact: Google and DoubleClick are complementary businesses, and do not compete with each other," Drummond argued. He offered this analogy: DoubleClick is to Google what FedEx or UPS is to Amazon.com.
Because some have raised questions about privacy in connection with this acquisition, Drummond's testimony went on to position Google as an advocate for consumer privacy. The company, he said, is constantly working to innovate its privacy practices and policies. His bottom line: Privacy is a user interest that Google has been protecting since its inception.
"We make privacy a priority because our business depends on it. If our users are uncomfortable with how we manage the information they provide to us, they are only one click away from switching to a competitor's services," Drummond said. "User interests effectively regulate our behavior, and user trust is a critical component of our business model."
The FTC's Dilemma
Richard Neff, a partner at Greenberg Glusker in Los Angeles, said the FTC might be compelled to act for two reasons: First because Google's dominance in the online advertising world is awesome, and second because privacy fears are becoming a popular political issue.
A large part of the antitrust analysis turns on whether Google will be in a position to increase prices. "The Brookings Institute -- which was frankly paid by Microsoft and AT&T, but still strives for independence -- recently found Google would be in a very strong position to raise prices," Neff said.
"When you combine all the search information Google has about every person's search request and Web surfing with what advertisers want, Google certainly is in a position to make advertising more valuable than any other company," he concluded. "The FTC may intervene."