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Google finalized its $3.1 billion purchase of ad delivery giant DoubleClick Tuesday after European Union regulators ruled that the purchase does not violate anti-monopoly rules in Europe which removed the last legal hurdle for the hotly contested acquisition.

Microsoft hoped that regulators in Europe and the United States would block or attach conditions to the purchase as a way to slow Google's growing lead in online advertising and search. Privacy groups opposed the sale on the grounds it would give Google too much information about what individuals do on the internet and thus much power to shape what content is created online.

The European Commission did not see it that way:

[T]he merged entity would not have the ability to engage in strategies aimed at marginalising Google's competitors, mainly because of the presence of credible ad serving alternatives to which customers (publishers/advertisers/ad networks) can switch, in particular vertically integrated companies such as Microsoft, Yahoo! and AOL. The market investigation also found that the merged entity would not have the incentive to close off access for competitors in the ad serving market, mainly because such strategies would be unlikely to be profitable.

DoubleClick is an ad serving and management company that web publishers use to display and target visual and rich media advertising. The technology uses a DoubleClick cookie that reports back every time a user visits a site using the system, letting DoubleClick know that user 453689 likes to read motocross stories and GQ magazine and spends a lot of time playing online Flash games.

Google can merge that database with its deep knowledge of users' search histories, along with its growing database of URLs visited by Google users who don't realize that Google opts-in users users with accounts to its "Web History" program.

That program continually tracks their every step on the internet, not just when they are on a Google property, though that isn't clearly disclosed when users create a Google account nor even if they click on the "learn more" link.

So what does the purchase mean for citizens on the web?

Very clearly, you will soon be seeing more ads served by Google technology, and Google technology will be seeing and saving more information about what you do around the web than every before.

Prior to the purchase Google said it could not say what privacy policies will govern the new online behavioral database made possible by its acquisitions, citing SEC rules. But they did say it would improve the privacy practices around what are known as 'third party cookies,' that is, cookies served up by a website that are not attached to that particular domain (such as the Google Analytics cookie served up on THREAT LEVEL).

A Google spokeswoman was not immediately available for comment on what Google's new policies will be for letting users opt-in or out-of tracking around the web.

Jeff Chester of the Center for Digital Democracy says the EU, like the FCC before it, doesn't get the power of Google's ad network to shape what content gets published on the web.

"By failing to impose safeguards, EC regulators have helped strengthen a growing digital colossus that will now be in a dominant position to shape much of the global future of the Internet and other online media," Chester said in a press release. "This decision will have profound and unfortunate consequences for the Internet’s evolving role as a democratic communications medium."

Like Chester, the Annenberg School of Communication's Joseph Turow sees a foreshadowing of Microsoft buying Yahoo, thus creating a virtual duopoly in online advertising.

There is no stopping of the centralized collection and use of data about consumer’s habits online and off. [...] The decision portends the approval of Microsoft’s bid to buy Yahoo, and of Reed Elsevier’s decision to purchase Choicepoint.
In the face of a very few companies that can track all of us across media and a very few companies that can sell the media trackers even more specific information about all of us, a basic question becomes increasingly important: What can citizens who want to control the data companies and governments have about them (data which really tell the stories of their lives) do?

UPDATE: Although Google repeatedly told THREAT LEVEL it had great, but legally unspeakable plans to revamp DoubleClick's third-party information collection practices, the plans turn out to be vaporware.

Google spokeswoman Victoria Grand writes in:

We just closed today, so we don't have anything to update at this point. We are only now able to begin to integrate our operations. In the meantime, we have been working with others in the industry on the issue of privacy and advertising. [...]
[We] believe the industry and others interested in this, including the FTC, will agree on some helpful guidelines. In addition to that, our policy experts, product managers and engineers have been looking at third party ad serving and privacy broadly. If these efforts come up with useful innovations, we may offer them as suggestions for industry-wide adoption.

And Martin Laetsch, senior director of search strategy at marketing analytics firm Covario, provides some perspective on what the purchase means for Google's revenues and their tracking databases.

With this offering, Google will now be a legitimate player in banners, video, and rich media and can offer advertisers a direct means of purchasing the majority of their online media – without an agency intermediary. This is great for [small and medium-sized businesses] since it is quick and easy, but big brands get nervous when a large portion of their budget is going through a single company. Google already has 32% of US online ad spending and it is going to go up with this acquisition. Google’s revenues will sky rocket with this deal, but it will probably force large advertisers to start looking closely at the offerings from Yahoo and Microsoft.
Google now has behavioral targeting (BT) capabilities with DoubleClick’s DFA product. This is contrary to Google’s own stated privacy policies with regards to keeping customer information which is at the heart of behavioral targeting. Google’s response to this is “We are committed to transparency for end users, and to respecting the choices they make with regards to their privacy preferences.” They may end up with some sort of universal opt-out for tracking information, but it wouldn’t be surprising to see Google start to integrate behavioral targeting across multiple forms of media to start getting a comprehensive media mix optimization recommendation late in 2008.

All of which leads THREAT LEVEL to say -- get thee to the Customize Google extension for Firefox, which lets you anonymize your Google userid, block Google analytics tracking and prevent click tracking by making sure your Google web search results don't have re-written urls.

Final Update May 13 -

Google's Victoria Grand wrote in Wednesday to add:

You may want to point out in your piece that Web
History is for users who have chosen to sign up for a Google account and that during that sign up process the user can choose not to have Web History. The way your piece reads now suggests that anyone searching on Google has Web History, which is not the case. It is also important to point out that those with Web
History can delete their Web History either entirely, or in parts, at their own discretion any time they like.
Regarding merging data, there are contractual restrictions with customers which limit what we are able to do with DoubleClick data. We closed the acquisition yesterday so are only now beginning to integrate our operations. So, there is no data that is being combined as you describe.
Also, you should note that there is an opt-out option for users who want to delete DoubleClick cookies.

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