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Posts Tagged ‘Mergers’

Google Wants to Buy Yelp – Are Regulators in Sync?

December 18, 2009 1 comment

Rumours that Google wants to acquire Yelp (for $1.5 billion) hit the blogosphere and newswaves earlier today. While local advertisers may be part of the attraction (Google’s Place Pages for maps, etc.), I think the bigger story here is how Google continues to fortify its social search assets.  A smart move as social networking – with its mines of user profile data – continues to grow in relevance for online advertisers.  Commentators, most notably Wired, have mused that Google’s real competitor is Facebook (it’s social, not relevant search that’s key).  If you take that view, this acquisition makes total sense. Yelp – with 9 million uniques and $30 million in revenue for 2009  -is growing at a rate of 80%, while that same number for Citysearch, its nearest competitor, is around zero.  Yelp is an important acquisition for Google, as it builds its social search platform to compete with Facebook and others for online ad dollars.

The interesting question here is how regulators will view the Google-Yelp transaction. Will they view it in isolation, or will they analyze how this deal fits in with the seven other Google acquisitions currently pending with regulatory authorities? The ramifications are huge – particularly for the small, but growing mobile advertising market. Especially, since one of those 6 other transactions is Google’s bid to acquire AdMob, one of the largest providers of mobile advertising (see my post; Scott Cleland’s blog on antitrust concerns with this deal are also worth a read). Yelp is already on your app phone of choice – including phones featuring Google’s Android – and the synergies are almost poetic.  Plus, there are the persistent rumors that Nexus One (the Google phone), will be released next year.

All of this suggests that regulatory agencies need to be working very closely on merger reviews of technology deals in the coming months.  Coordination on these merger reviews needs to happen both between the agencies – here the DOJ, FCC and FTC – and with state Attorneys General that choose to review these transactions.  Coordination is key to the outcome of a process that will impact continued innovation and competition in the communications and technology industries.  Perhaps too, we will gain some insight into how the tech friendly Obama Administration really views merger policy in dynamic markets.

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Retreat to the Walled Garden

December 1, 2009 Leave a comment

Late last evening, GE announced that it had cleared a path to sell NBC-Universal to Comcast.  If consummated successfully, the deal would radically reshape the cable, entertainment and web media markets.  Already, there’s much speculation about how the deal will impact content distribution on the web.  Will this merged entity of cable plus content offer premium fare on a subscription basis?  Could this be the deal that starts a mass retreat to the walled garden?

The walled garden is definitely seeing a resurgence of interest among content owners.  What remains unclear is whether you can put up walls around a garden that’s been growing free and unfettered for much of its recent existence.  Will people pay for content that is now widely available for free?

Rupert Murdoch of News Corp. appears to think so.  His company dominates entertainment (20th Century Fox), cable (Fox News, etc.) and the web (MySpace, etc.).  But it also owns many of the newspapers that continue to struggle to survive in this age of online content aggregation (although some, like the Wall Street Journal, have successful online subscription businesses). In a fascinating interview, Murdoch makes the case for why he wants to put News Corp’s coveted content behind a wall (while opining frankly on the US economy, Obama press secretary Robert Gibbs, and Fox News).  As he puts it, “there’s not enough advertising in the world” that can profitably support the kind of content that consumers currently demand online.

My thanks to the fabulous Kara Swisher for her pointer to the Murdoch interview (her recent blog post on News Corp-Google-Microsoft provides a thoughtful perspective on that particular three-way).

Of course, the walled garden was not a panacea for AOL – the pioneer of the walled garden – who is currently planning to lay off a third of its workforce as it spins away from Time Warner.  But the garden is a successful model for social networking sites like Facebook and Linked In.

Looking ahead, a few developments are worth watching. First, the retreat to the walled garden will impact websites – such as Hulu – that offer premium, first-run content for free.  Hulu, which shot to the web’s top 10 in its first month of launch, is a joint venture between News Corp, NBC and Disney.  The site relies on advertising (2 minutes vs. the 8 you get on real-time TV) and “will be profitable soon” according to NBC CEO Jeff Zucker.  It also plans to launch a subscription site of its own.  We hope it starts making money before a wall goes up (where else can you find 94 episodes of Bewitched all on one page?).

There will also be a marked impact on electronics manufacturers.  Gone are the days when people only watched network shows on TV and surfed the Internet solely on a PC.  Some manufacturers are already starting to wake up to this reality with devices– such as internet-enabled TV – which consolidate distribution into one big fat pipe.  As the content industry undergoes a metamorphosis, hardware will need to keep up.

Most relevant for this blog, there will be an impact on law and policy.  Market definitions – always critical to the regulatory approval of a merger – are even more important in dynamic markets.   Regulators will need to get smart quickly about how media consumption continues to evolve in the digital age.  And the abundance of policy issues  – net neutrality and targeted advertising to name a couple – should make this debate a must-see.

Stay tuned!

Will Admob Acquisition Clarify the Role of Privacy in Web (or Wireless) Competition?

November 10, 2009 1 comment

A couple days ago, I mused about how Google might monetize newly integrated features such as voice-activated GPS in the latest version of Android, its mobile operating system.  Almost in answer to my question, Google announced today that it will acquire AdMob for $750 million in stock. AdMob is a three-year old mobile advertising start-up that is a leader in the growing mobile advertising sector.  Already, AdMob provides advertising for mobile phones such as the iPhone and smartphones running Google’s Android.

Google believes that the acquisition will clear regulatory hurdles — but that remains to be seen.  The company faces a very different regulatory environment now then it did in March 2008 when it acquired Doubleclick.  At that time, Commissioner (and now FTC Chair) Jon Leibowitz acknowledged the concerns expressed by privacy advocates but supported the transaction on the grounds that online privacy needed to be addressed on an industry-wide basis (and not through a single merger decision).

Since then – and in large part to Leibowitz’s own initiatives as FTC Chair – a perfect storm has been brewing over how privacy should be regulated online.  The FTC will examine online privacy through its upcoming roundtables entitled “Exploring Privacy” and it’s likely that the mobile web will be part of the discussion.   For instance, the FTC’s April 2009 web commerce report notes concerns with spam and children’s online privacy on certain devices (such as those which have internet browsers and GPS technology).  And that’s just the FTC.  We’re not even delving into FCC Chairman Julius Genachowski’s interest in promoting wireless competition – a topic that has been well-covered in recent weeks.

Will regulators take this opportunity to better define what role privacy should play in web competition?  It’s an unanswered, yet important question – particularly for an industry whose growth is fueled by data and financed by advertising based on that data.  With the acceleration and developments in mobile advertising, the question is especially ripe for discussion. Let’s see who takes the bait and dares to provide an answer.