Microsoft Warns of Google-DoubleClick Danger
- By Keith Ward
- April 17, 2007
Microsoft isn't taking Google's
proposed purchase of DoubleClick
Microsoft released a statement by Brad Smith, Microsoft senior vice president
and general counsel, that is nothing less than a warning shot across Google's
bow. The statement, released on Microsoft's Web site, reads:
"This proposed acquisition raises serious competition and privacy
concerns in that it gives the Google-DoubleClick combination unprecedented
control in the delivery of online advertising, and access to a huge amount
of consumer information by tracking what customers do online. We think this
merger deserves close scrutiny from regulatory authorities to ensure a competitive
online advertising market."
The irony is that Microsoft was one of the companies, along with Yahoo and
Time Warner, jockeying to buy DoubleClick, an online ad management company.
The sale, which is expected to be completed by the end of the year, has been
approved by both companies. The price is reported to be $3.1 billion in cash.
That was apparently too steep for Microsoft and the rest of the competition,
given DoubleClick's value. The Wall Street Journal, in an article quoting
knowledgeable sources, pegged DoubleClick's revenues last year at about $150
million. When word leaked out that DoubleClick was for sale, the owners, San
Francisco private-equity firm Hellman & Friedman, were seeking about $2
billion for the company. Even that lower price was too steep for Microsoft to
Don Dodge, director of business development for Microsoft's Emerging Business
Team, said on his blog regarding the lower, $2 billion sales price: "Maybe
20 times earnings would make sense, but 20 times revenues? You have got to be
Google wasn't kidding and, if the revenue estimates are correct, paid about
30 times revenues for DoubleClick.
A further irony in Microsoft's statement is that it reads very similarly to
lawsuits that have been filed against the Redmond giant over the years. Competitors
have complained for decades about Microsoft's supposed stifling of competition
and desire to monopolize the market, which has caused the U.S. government and
the European Union to slap Microsoft down and regulate what software it bundles
with its Windows operating systems.
Google, for its part, is on a serious buying spree. The potential deal for
DoubleClick comes on the heels of Google's purchase of YouTube last year for
Microsoft has yet to release any further information on the Google-DoubleClick
deal, but Smith's statement portends that this story is far from over.
Keith Ward is the editor in chief of Virtualization & Cloud Review. Follow him on Twitter @VirtReviewKeith.