WASHINGTON (Reuters) - Google Inc has won U.S. approval to buy mobile advertising rival AdMob, after months of delay and rumor that the No. 1 Internet search engine was headed for a court fight with government officials over the $750 million transaction.
The Federal Trade Commission's decision followed unusually public comments by app developers -- whose software for mobile devices are often supported or subsidized by advertising -- that the agency's staff seemed determined to challenge the deal.
The FTC said in a statement on Friday that it was concerned that two top mobile advertising networks were combining, but said Apple Inc's entry into the market would mitigate the effects of the Google/AdMob powerhouse.
"The decision was a difficult one because the parties (Google and AdMob) currently are the two leading mobile advertising networks, and the commission was concerned about the loss of head-to-head competition between them," the FTC said in a statement.
Apple's new platform for the iPhone and iPad -- dubbed iAd -- marked Apple's first move into a small but growing market and comes shortly after its purchase of Quattro Wireless, the third largest mobile ad network, Quattro Wireless.
The commission said it believed Apple would quickly become a strong mobile advertising network competitor.
"Though we have determined not to take action today, the commission will continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers," the FTC said.
Google, which announced the deal in November, called the approval "great news" and said it would close "in coming weeks."
AdMob founder and Chief Executive Omar Hamoui said he was pleased with the decision and would work with Google to close the deal.
Despite an early, small bump in Google's stock price, it quickly shed the gains to close down 0.62 percent at $472.05 on Nasdaq.
"It's heavy volume, they got the bump and they took it back down," said Colin Gillis, a senior tech analyst with BGC Financial. Gillis argued that the slip was at least partially because the AdMob acquisition will do little to immediately push up Google's revenues.
The mobile ad market was evolving and growing so fast that challenging a deal in the space would be very difficult, said David Balto, a former FTC policy director.
"Apple's moves over the last couple of months hurt the FTC's case," he added, referring to the iAd launch and requirement that app developers work within certain specifications.
Few app developers seemed to share the FTC concern that the Google-AdMob merger would leave them with fewer firms to sell their advertising space.
One told Reuters in April that the FTC staff appeared "dead set against" approving the deal, and went on to say that he was puzzled by the FTC's concern.
This sort of commentary -- and that of others who went online to describe similar interaction with the commission -- made the FTC's job even harder as it faced the prospect of explaining its case to a judge, said Jeff Shinder, an antitrust lawyer with Constantine Cannon.
"Someone's got to get hurt here. You want to show consumers coming in, saying 'I'm worried,'" Shinder said on Friday. "And (it hurts) when one of these constituencies is openly disdainful of the agency's action."
Google, which generated 97 percent of its $23.7 billion in 2009 revenue from advertising, has faced growing antitrust scrutiny as it seeks to use revenue from its dominance of the search market to move powerfully into other markets.
The company walked away from a search deal with Yahoo Inc in 2008 when the Justice Department said it would challenge the tie-up. And Google Chief Executive Eric Schmidt was forced to step down from Apple's board last year after his dual roles came under FTC review.
The U.S. Department of Justice has been sharply critical of Google's settlement with book publishers and authors' groups that would allow the search giant to create an online digital library. That class action settlement is awaiting approval by a court in New York.
Reporting by Diane Bartz; Editing by Tim Dobbyn, Richard Chang and Carol Bishopric