The decision will be a blow to Google, putting a question mark
over the deal until at least next spring. The Commission has 90
working days in which to make its decision on the future of the
combined company. A decision must be made before 2nd April
2008.
The internet search giant makes most of its money from text ads
that appear beside the answers to search queries. Doubleclick is an
online ad-serving company whose systems post and monitor internet
adverts.
The European Commission, which regulates competition law in
Europe, has wide-ranging powers, including the power to block the
merger in Europe.
The investigation will look at whether the combined company will
be able to use its power to stop others competing with it in the
future.
"[The Commission] will investigate whether the merger, which
combines the leading providers of respectively, on the one hand,
online advertising space and intermediation services, and, on the
other hand, ad serving technology, could lead to anti-competitive
restrictions for competitors operating in these markets and thus
harm consumers," said a Commission statement.
The investigation will also make a more complicated analysis
when it decides whether Google's purchase has the effect of
eliminating a future competitor.
"The Commission will, in particular, investigate whether without
this transaction, DoubleClick would have grown into an effective
competitor of Google in the market for online ad intermediation,"
said the Commission.
The European Commission has been very active in competition
cases in the technology sector this year, and won a major victory
when Microsoft said it would not appeal a Commission ruling it had
disputed since it was made in 2004.
Since summer it has accused memory maker Rambus of abusing its
dominant market position and conducting a "patent ambush", and has
said that a six year investigation into Intel revealed that the
chip giant had an "overall anti-competitive strategy".
