It's been widely publicized that the Federal Trade Commission (FTC) has been sniffing around this whopping $750mil deal since it was announced in November, and at the end of last month two consumer advocacy groups, Center For Digital Democracy and Consumer Watchdog, wrote a joint letter to that regulator making the broad claim that if the deal was to go through “consumers will face higher prices, less innovation and fewer choices.” But, frankly you hear that stuff from watchdog groups on every deal of scale these days, and it kinda seems like part of the hazing process companies go through to get these things done. But I think the detailed, cogent arguments made by Buckingham, and folks like Scott Cleland of Precursor LLC (who made a similar case in a white paper back in mid-December), about the impact on a very specific segment of the mobile ad business (which I frankly hadn't considered), are ultimately more powerful. That said, I'm still reserving judgment on the matter, as I can envision scenarios in these still early days that could mitigate anti-competitive concerns, including; 1) the inevitable evolution of all the app stores and their inventory ecosystems, which may inure more greatly to the benefit of more nimble players; 2) the emergence of innovators with products yielding greater efficacy that will woo publishers and win inventory share; and 3) after what happened in the WAP advertising world I never underestimate the willingness of well-heeled companies to buy into the space with hefty minimum guarantees. But I do say bring on the regulatory scrutiny, especially if its primary objective is to facilitate fair competition. Frankly, I'd be very surprised if the FTC completely blocks this deal entirely, but I definitely think they should take a very detailed look at it and force appropriate divestitures in specific market sectors, if that's what the situation warrants. Let me know what you all think.
Friday, January 29, 2010
Simon Buckingham, best known as the CEO of Mobile Streams, wrote a provocative article on his new Appitalism blog (where he's "Chief Appitalist") on Friday, entitled "Why The FTC Should Block Google’s Merger With AdMob." In the piece he argues that in the new app economy, dominated by the iTunes App Store, in-app advertising has become a critical tool for publishers trying to break through the clutter of 140k+ apps. Currently AdMob and Google dominate this space as the #1 & #2players, followed by Quattro, in a distant 3rd. Buckingham estimates that if Google is allowed to buy AdMob the combined entity would control over 75% of in-app ad market... and that's before Google's new AdSense for Mobile Apps program gets out of Beta. Limited competition in the market will likely lead to increased costs, will potentially stifle the creation of more innovative ad programs and, ultimately, hurt the overall financial health of this nascent, yet vibrant, component of the mobile economy.