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Google misled investors about AdMob antitrust risk -- Google agreed to 23 times normal deal "kill fee"

New evidence suggests Google blatantly misled public investors about its own assessment of the antitrust risk involved in Google acquiring AdMob.

On Google's webpage on the AdMob acquisition, in the Q&A section, Google said at the time of the acquisition:   

  • Question: "Do you have any concerns about regulatory approval?"
    • Answer: "We don't see any regulatory concerns with this deal..."
  • (At the time, Precursorblog posted that Google was clearly misleading people about the antitrust risk the deal faced.)

Now we learn from a Bloomberg/Business Week story:

  • "Google CEO Eric Schmidt was so intent on buying AdMob that two people with knowledge of the deal say he agreed to pay a "kill fee" of around $700 million if the deal failed to close for some reason, such as an antitrust motion from the Justice Dept." 

It is important to put this $700m AdMob deal "kill fee" in perspective.

  1. $700m is 93% of the $750m purchase price of AdMob -- an unheard of high deal kill fee.
    • (This was the equivalent of a full payment guarantee for AdMob to not work with Apple, where Eric Schmidt just happened to be a Director until last August when the FTC forced him off.)
  2. Normal M&A deal kill fees, are 3% or 4%, not 93%.
  3. The Google-AdMob deal kill fee is thus 23 times the normal amount -- an amount way out-of-bounds by any measure of Google's fiduciary duty to protect the interests of its public shareholders.
  4. AdMob, with its superior assessment of the competition in its market, obviously saw substantial antitrust risk of disapproval, given that AdMob knew they were the strong market leader and Google was their primary competitor.
  5. AdMob demanding a deal kill fee two times normal should have indicated to Google the deal carried significant antitrust risk.  A deal kill fee 23 times bigger than normal should have been an obvious blinking neon billboard of "ANTITRUST RISK!" for Google's leaders, executives, lawyers and investor relations professionals.  

With little doubt, an unprecedentedly high deal kill fee was material information public investors should have been informed about when the deal was announce, so they could have assessed the deal fairly and accurately.  

In sum, not only is Google among the absolute least transparent major publicly-traded companies... and not only does Google no longer allow investors to question Google's leadership about Google's exploding antitrust, privacy/security and IP/copyright liabilities... now we learn Google is knowingly giving investors false material information about its largest pending transaction. 

Lastly, investors probably would like to know why Google was so eager to gamble and pick a fight with antitrust authorities over this deal...