Antitrust experts predict that Google Inc's purchase of advertising company DoubleClick for $3.1 billion will be approved by U.S. regulators despite vehement opposition from competitors Microsoft Corp and Yahoo Inc.

While Google's rivals argue that the merger poses antitrust and privacy concerns, experts say advertising remains a big market and Internet advertising is wide open for new entrants. Privacy, they add, is not a core antitrust concern and regulators were unlikely to consider it when evaluating the merger.

Mark Kovner, an antitrust lawyer with Kirkland & Ellis, said the Federal Trade Commission was not inclined to block vertical mergers, which are usually the combination of two companies producing different goods or services for the same product.

The agencies have been looking at head-to-head competition, Kovner said, adding that putting search engine advertising into a separate market seems like a jury-rigged market definition. To the outside observer it seems like advertising is a big wide open field.

Google stores data on the Internet-surfing habits of users and uses it to make money selling ads. DoubleClick connects ad agencies, marketers and Web site publishers.

Steven Sunshine of Skadden Arps Slate Meagher and Flom LLP said privacy concerns about the merger were irrelevant.

What we're really talking about is Internet advertising. The companies are in a slightly different space. The field is too open, and there are too many competitors, Sunshine said.

It is being reviewed by an administration that has been less aggressive than past administrations in challenging mergers, he added.

The FTC declined to comment on its review of the Google deal. The agency began the review in May and made a second request for documents that same month.

Google's purchase is part of a rapid consolidation in the Internet ad industry that includes Microsoft Corp's $6 billion acquisition of aQuantive Inc, home to the largest interactive ad agency. Yahoo bought BlueLithium for $300 million and Time Warner Inc's AOL unit bought Tacoda for what one source said was $275 million. Both of the acquired companies use cookie technology to record Web surfing habits of consumers so advertisers can target ads based on the information.

U.S. regulators have already approved those deals.

A TOSS-UP?

Bert Foer of the American Antitrust Institute said he thought the Google-Doubleclick merger was too close to call.

What it has in common with some of the recent cases is the market definition, Foer said. In the XM-Sirius case and the Whole Foods case, as in most cases, it's a problem of defining the market. It's a very dynamic market.

The market is clearly evolving, he added. The question is, do you interfere now or leave it alone?

The online advertising market saw revenue surge to nearly $10 billion in the first half of 2007, a 27 percent jump from the year-ago period, according to Interactive Advertising Bureau and PricewaterhouseCoopers.

A Microsoft official said earlier this month that the online advertising market was growing between 15 percent and 20 percent annually worldwide, compared with a gain of only 2 percent to 3 percent for the global advertising market.

The Google-DoubleClick deal is unlikely to trigger higher online ad prices, said antitrust lawyer Steven Axinn of Axinn Veltrop & Harkrider.

It is hard to make the case persuasively that the market for Internet advertising is all that different from electronic, he said. I do not think it would be responsible to stop that transaction.

The Google-Doubleclick merger may get closer scrutiny in Europe, where EU officials must also approve it, Kovner said.

In the EU, vertical issues have historically gotten more play. And size seems to matter more in the EU, Kovner said.

The European Commission set a deadline of October 26, when it would approve the deal, give a two-week extension or open an in-depth four-month investigation.

Australia is also looking at the merger. Objections from any of the regulators could prevent it from going forward.

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