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European antitrust regulators on Tuesday approved Google’s $3.1 billion merger with DoubleClick, paving the way for a blockbuster deal in Internet search and publisher-based advertising tools.

Approval by the European Commission, which came without conditions, had largely been expected to occur this week. The Commission’s announcement comes three weeks before its April 2 deadline, in which it had to determine whether to nix the deal.

With the Commission’s decision in place, Google announced on Tuesday that it has formally closed its merger with DoubleClick.

“We are thrilled that our acquisition of DoubleClick has closed,” Eric Schmidt, Google’s chief executive, said in a statement. “With DoubleClick, Google now has the leading display ad platform, which will enable us to rapidly bring to market advances in technology and infrastructure that will dramatically improve the effectiveness, measurability, and performance of digital media for publishers, advertisers, and agencies.”

According to the Commission’s announcement, the deal was approved based on several factors:

The Commission’s in-depth market investigation found that Google and DoubleClick were not exerting major competitive constraints on each other’s activities and could, therefore, not be considered as competitors at the moment.

Even if DoubleClick could become an effective competitor in online intermediation services, it is likely that other competitors would continue to exert sufficient competitive pressure after the merger. The Commission therefore concluded that the elimination of DoubleClick as a potential competitor would not have an adverse impact on competition in the online intermediation advertising services market.

The Commission also analyzed the potential effects of nonhorizontal relationships between Google and DoubleClick, following concerns raised by third parties in the course of the market investigation.

These relationships concern DoubleClick’s market position in ad serving, where Google, by controlling DoubleClick’s tools, could allegedly raise the cost of ad serving for rival intermediaries, and Google’s market position in search advertising and/or online ad intermediation services, where Google could allegedly have required purchasers of search ad space or intermediation to also purchase DoubleClick’s tools.

The Commission found that the merged entity would not have the ability to engage in strategies aimed at marginalizing 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.

Google’s rivals such as Microsoft, as well as privacy groups, were hoping that the Commission, as well as U.S. antitrust regulators, would kill the Google-DoubleClick deal. But the Commission’s passage clears the acquisition’s last large regulatory hurdle.

Last December, the Federal Trade Commission gave the online-advertising megamerger its blessing.

U.S. regulators noted that Google and DoubleClick are not direct competitors and that the markets within online advertising evolve quickly. As a result, the FTC did not find evidence that competitive harm would arise from the merger.

The decision by the FTC had come after the European Commission determined in November that it would take a deeper look into the proposed merger. Some antitrust experts at the time noted that Google could face a difficult time in Europe, given differences in the way federal and European regulators evaluate mergers.

Opponents of the merger weigh in
“U.S. and European policymakers must reform the antitrust process to reflect the realities of the digital-market era, where competition, data collection, and content creation are seamlessly intertwined,” the Center for Digital Democracy, which had presented its opposition to the FTC and the Commission, said in a statement Tuesday. “In today’s digital marketplace, the company that controls the most data about consumers, and has the global reach to connect to them, raises both anticompetitive and privacy concerns. An antiquated and piecemeal antitrust approach fails to protect citizens, consumers, and competition.”

The organization also cited concerns that the merger would aid Microsoft in its goal to acquire Yahoo. That deal is largely being driven by Microsoft’s desire to bolster its online-advertising capabilities.

“Instead of ensuring competition, (the Commission) and the FTC have literally paved the way for the emergence of a global digital duopoly over online advertising,” the Center for Digital Democracy stated.

Google described on Tuesday how it secures the mountains of data that it handles every day, saying that it has highly automated processes and employs the best and brightest in Web security.

On the Official Google Blog, Douglas Merrill, a vice president of engineering, spelled out the company’s philosophy, processes, and technology that the company employs for security.

He said that the company is developing its own security software, particularly to address areas such as large-scale computing and automation.

Google’s processes are set up so that sensitive personal information can only be viewed by exception, Merrill said.

“We carefully manage access to confidential information of any sort, and very few Googlers have access to what we consider very sensitive data. This is in no small part because there’s very little reason for us to provide that access–most of our processes are automated, and don’t require much human intervention. Of course, the limited number of people who are granted access to sensitive data must have special approval,” he wrote.

After ComScore reported a recent decline in Google’s paid clicks, the Net ratings service followed up, noting evidence that the drop was due to “Google’s own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur.”

The reduction in listings, ComScore noted, was “offset by paid revenue per click.”

On Monday, at a Bear Stearns media conference in Palm Beach, Fla., Tim Armstrong, Google’s president of advertising and commerce in North America, offered essentially the same view on the matter.

As noted by ZDNet Editor in Chief Larry Dignan, Armstrong emphasized that the dip in paid clicks was intentional–part of a strategic plan designed to deliver better, more-precisely targeted ads. Thus, the market anxiety that hit Google’s stock was, well, unjustified.
OK then, but Dignan also cites Armstrong’s acknowledgment that “search is changing overall in general” and tends to reflect macroeconomic conditions–an acknowledgment, Dignan points out, that suggests Google isn’t recession-proof.

Google also told conference attendees that it won’t be developing its own content, that it will increase the number of videos and ads on YouTube, and that the company’s system won’t differentiate between search and display ads over time.

Google’s general theme is to offer advertisers a complete dashboard with multiple forms of advertising. Armstrong also noted that Google will deliver ads on social networks via widgets and social-networking apps.

John Mark Walker, Hyperic’s community lead, has an interesting take on whether Google deserves to be loved or loathed for its open-source community outreach.

John Mark is in the former camp and, increasingly, so am I. Google is the Teflon open-source company, contributing selectively and strategically…and winning kudos across the board.

Self-interested Google? Absolutely. But then, how many companies do you know that aren’t self-interested contributors to open source? Walker notes:

I didn’t say they were altruistic, but rather that they knew what they were doing with respect to community development. They invest in communities, many of them related to open source, and this devotion to community helps them tremendously. It helps them when they launch a new set of services because the communities they target will no doubt be the early adopters.

It helps when Google launches a new platform, such as Android, because its communities will be the source of a great number of hackers who will enjoy bending Android to their will.

I wonder, however, if Google gets a free pass on so many issues simply because developers are praying for an alternative to Microsoft’s dominance? Perhaps many, or most, embrace Google, thinking, “The enemy of my enemy is my friend.”

Or perhaps Google has done an exceptional job of looking past the criticisms that I and others have thrown at its open-source efforts, and simply barrels forth. When you’re on the top of your game, you can afford to do this.

I’m always bemused to see companies stop to throw stones back at critics, as if it’s going to help their stock price. The only thing that silences critics is performance–something Google has had in spades.

Back to John Mark’s point. Google has been exceptional in some areas of community development. The Summer of Code was a masterstroke of genius. Hiring key open-source developers such as Greg Stein hasn’t hurt, either. Together, its open-source community outreach has been executed well, though not flawlessly.

Perhaps Google has more to teach us than advertising.

Ex-Googler start-ups are coming out of the woodworks. And now there’s one more.

Steffen Mueller, an ex-Google product manager from Munich, Germany, has launched his own version of Web search with a dash of the social. Mueller and a few friends from Germany started Topicle, which launched in beta on Monday.

The site lets anyone create or edit their own search engine on any topic–recipes, mortgage news, New York City or even peanut butter. People create a search topic and then choose the Web addresses from which Topicle will search. (Topicle uses Google search APIs to produce its search results.) People can search from one of the preexisting topic search engines, build their own, or rate the domains within an existing topic.

Of course, vertical search engines are nothing new. Sites like Rollyo have been trying to simplify domain-specific search for years; and the major search engines offer similar services for tech-savvy people. Google, for example, runs Google Coop, a service that helps people create a specialized search engine for their Web site. But these services largely haven’t gotten off the ground yet.

Mueller said the human element will ultimately improve search, similar to Wikipedia’s effect on encyclopedia listings.

“Topicle generates more precise and useful search results with sources recommended by humans, as opposed to sources picked solely by a computer algorithm,” said Mueller, who joined Google in early 2004 and worked on various projects including Google Maps and Froogle.

Mueller said Topicle is the first product of his company Zoolium. He did not detail how the company plans to make money. Zoolium is privately funded with $200,000 of Mueller’s money.