EU Opens Formal Inquiry Into Google + DoubleClick Merger

Having concluded a preliminary review into the ramifications of search engine and contextual ad provider Google merging with display ad and campaign management system provider DoubleClick, the European Commission has decided it will now open its formal "in-depth investigation" into the matter.

In a statement this afternoon, the EC stated its preliminary review concluded the merger, proposed last April, "would raise competition concerns in the markets for intermediation and ad serving in online advertising."

While the US Federal Trade Commission is also reviewing the merger, and has received several petitions opposing it, the EC investigation will likely last longer. For now, the EC has given itself a 90-day deadline - until next April 2 - to decide whether the merger would significantly impede competition in all or part of Europe.

What measures the EC could then take would not only set historic precedent, but may also pit two of the world's leading economies against one another in a showdown over who has the right to regulate American business. While on the surface, it's inconceivable that the EC could effectively block the merger of these two companies - whose New York offices have always shared the same building - from taking place, it could stipulate that Google and DoubleClick would not be allowed to do business in Europe as one company.

And since it's pretty difficult to put up one virtual storefront for one hemisphere of the Internet and two separate ones for the other hemisphere, a ban on doing business as a merged company could be as good as an outright block. A Google spokesperson has already told BetaNews the entities will not merge until the EU government has given its outright approval.

According to today's statement, the test before the formal EC inquiry now will be whether, if DoubleClick and Google were left to their own devices, DoubleClick would have gotten into the context ad business on its own, competing with AdSense. "The Commission will, in particular," today's statement reads, "investigate whether without this transaction, DoubleClick would have grown into an effective competitor of Google in the market for online ad intermediation."

While on the one hand, Google is prepared to wait, on the other it would prefer that the European Commission get a move on. In a statement to the BBC this afternoon, CEO Eric Schmidt said, "We seek to avoid further delays that might put us at a disadvantage in competing fully against Microsoft, Yahoo, AOL, and others whose acquisitions in the highly competitive online advertising market have already been approved."