DoubleClick: Microsoft Loses, Then Whines

Now that Google (GOOG) has won the contest to buy dominant ad server company DoubleClick, one of the losers in the bidding, Microsoft (MSFT) is complaining that Google may be creating a monopoly.

According to the FT, Microsoft management is worried that “over 80 per cent of the adverts delivered to website publishers, so their combination in a single company has big ramifications.” (Brad Smith, Microsoft’s general counsel.) Microsoft complaining about anticompetitive behavior has an irony all its own.

But, the world’s largest software company may be right. With its huge footprint in the search-based text ad market, Google will now control a very large portion of the display ad placement business worldwide.

AT&T (T), Yahoo! (YHOO) and Time Warner’s (TWX) AOL have voiced similar complaints. “To the extent that they are the broker of advertising for anything moving on the internet, we would be forced to deal with Google on Google’s terms,” said Jim Cicconi, head of external and legislative affairs at AT&T (Source: FT).

Of course, every company that feels aggrieved by Google’s purchase could have bought DoubleClick for itself. None of them were willing to risk $3.1 billion  Industry rumors put the ad serving firm’s revenue as low as $150 million.

But, Google views ad serving as strategic. As its purchase of YouTube played to its desire to dominate online video, the purchase of DoubleClick puts it in the poll position as online advertising middleman for text and display advertising.

Google competitors can complain, but the search giant was the only one willing to place such a large bet.

No guts, no glory.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.