That’s the message I get from reading the commission’s majority report on the merger. Despite their protestation that they read a lot and interviewed people, it’s evident the FTC staff–and more troubling a majority of the commissioners–don’t have a clue about the online ad business they are supposed to be overseeing. Frankly, until CDD and USPIRG came in and brought the commission up to date, they didn’t have much of an understanding about behavioral targeting. We tried to help the commission since the proceeding began to get up to speed, sending them the data and offering contacts. Here, by the way, is an excerpt from a letter we sent the commission last week (December 10), recapping in writing what we had supplied them electronically over the months:
“Point 3: The combination of the metrics derived from the combination of the Google’s and DoubleClick’s “database of intentions” will trigger an unfortunate, anti-competitive, and economically harmful online advertising market structure. As the “Global Ad-Serving Leader,” DoubleClick explained in a 2006 presentation, its “Ad-impressions” have increased by 70 percent since 2005 (that year it served 1,346,149,954,854 such impressions). Each day, the company serves “8 billion Search, Display and Rich Media Ads.” Among the benefits of DART for Advertisers (“the number one choice for a 3rd Party Ad Serving Solution”), aside from the “Centralized Online Ad Management” system, was the “ROI Reporting” utilizing “Spotlight Tags [which] track consumer actions from impression to sale/action.” Certainly such data acquisition added to Google’s already-extensive wealth of market metrics and analysis tools (let alone user IP and search history) will help further broaden the already-impassable distance between Google and its closest competitor. Indeed, DoubleClick’s recent expansion of its cross-industry data-collection and tracking services will be a formidable anti-competitive advantage for the company. It’s new “Floodlight” system “combines the functionality of a spotlight tag with the ability to act as a universal tag for all other tracking tags, regardless of ad network.” If such a merger is approved, the Floodlight services will also reward Google with a way to track “post-click conversion…on a real-time basis across multiple ad networks with whom DoubleClick have no direction affiliation. The data advantages from DoubleClick’s operations, including such acquisitions as Falk, will provide Google a treasure trove of metrics that will only add to the anti-competitive network effects. If the FTC has not examined the IP-related analysis performed for DoubleClick by such clients as Digital Envoy and Quova, it should do so. How Google plans to incorporate this system, we would argue, is something that must be addressed.
The integration of the Google and DoubleClick data centers will also provide a far-reaching advantage (and, once again, raise the consumer privacy protection issue). In 2006, DoubleClick touted to clients its “Massive…Technical Infrastructure, featuring
• 640 Terabytes of storage
• 964 Gigabytes of log files processed each day
• Serving approximately 8 billion ads daily
• 17 Data Centers Strategically Placed Around the Globe
By the third quarter of 2006, DoubleClick had 30 Media Servers based in Chicago; 62 AdServers and 15 Media Servers in New Jersey; 62 AdServers and 30 Media Servers in New York City; 124 AdServers and 45 Media Servers in Ashburn, VA; 15 Media Servers in San Jose, CA, and a company-operated “backend system” in the Thornton, CO area. The company also had 118 Ad Servers through its International Data Center operation, including Sweden, United Kingdom, Germany, France, Japan, Taiwan, China (Hong Kong), and Australia. DoubleClick’s control over the database “log files” on its adservers that it collects and maintains for its clients provide it with a first-hand understanding of how the individual bits and patterns of data work most effectively for their clients, the vertical and cross platform content business, and finely-focused consumer sets. This is “cookie-level” information that DoubleClick—and potentially Google—can operationalize for their own anti-competitive activities.
We admit we are not experts about the range of Google’s clearly impressive data-storage and -analysis operation. But the melding of the two systems will clearly pose even greater challenges for competitors who will require the scope and range of such processing services. Google has, according to one recent published study, “anywhere from 100,000 to 165,000 or more servers…. Google data centers—now numbering about two dozen… come online and automatically, under the direction of the Google File System, start getting work from other data centers. These facilities, sometimes filled with 10,000 or more Google computers… are concentrated in North America with other data centers located in Switzerland, the Pacific Rim, and Beijing.” While Google shouldn’t be penalized for its cutting-edge development of servers and data centers, the manner in which they are combined with DoubleClick’s existing system must be part of the antitrust analysis.”
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