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Google should be hearing EU antitrust footsteps...

It is never a good omen for a merger's approval outlook, when EU antitrust authorities can't wait to investigate the impact of the merger and proactively inititiate their own antitrust investigation -- before their official process even gets started.

Google's antitrust lawyers have to be bummed by the development reported by Reuters that: "EU questions customers over Google-DoubleClick deal."

  • "The European Commission has taken the unusual step of sending questionnaires to Google customers before the company officially seeks permission to take over a rival..."

What does this mean for the outlook for approval of Google-DoubleClick?

  • Why ask questions of customers? It appears the EU is worried the merger is anticompetitive. Moreover, these types of questionaires of customers are one of the best ways to uncover anti-competitive complaints and concerns in the industry.
    • If the EU doubted there anti-competitive problems with the merger, they would not bother with a questionaire and they certainly would not start investigating before they have an official proposal to investigate.  
  • Eagerness to investigate deeply and independently is never a good omen for approval of a merger.
    • It may be particularly problematic in this case, if my analysis is right that -- "the more one learns, the more concerned one gets about the anti-competitive impact of the Google-DoubleClick merger."
    • As I have said before, the facts are not Google's friend, because of the extraordinary concentration of the Internet.
  • Is the EU being encouraged by the FTC? The EU may be picking up signals that the FTC is concerned about the merger.
    • Moreover, the EU does not want to be marginalized and left out in investigating a high-profile Internet merger.
    • Furthermore, the fact that the EU is stepping out of the "normal process" likely means that they have a compelling and important need to not follow the normal process -- i.e. this is a big, complex, global, time-consuming antitrust review.  
      • Remember, Google with ~750 million users worldwide, and DoubleClick with ~800 million ad viewers worldwide, may make this acquisition the most truly global merger the EU has ever seen.
  • EU opportunity to lessen US dominance of the Internet? While they would never admit it, the EU probably sees blocking the Google-DoubleClick merger as a very useful way to undermine America's dominance of the Interent overall.
    • The facts can't help. 
      • Google's market share of searches in Germany and Spain are ~90%; and 
      • the French/EU attempt to establish a euro-search engine failed badly.
  • Is EU structural separations happy? Remember, the general EU policy stance is for regulation to ensure competition in most every layer of tech businesses. For example, the EU wants Microsoft to separate Windows from Media Player and Apple's Ipod from Itunes.
    • Such a structural separations-happy EU policy bias cannot be good news for Google which wants to cross-leverage American dominance in search with American dominance in ad-serving.

Bottomline: The EU jumping the gun to investigate the Google-DoubleClick merger is yet another ominous sign that this merger faces an uphill fight to secure antitrust approval.