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Google will pay AdMob $700m even if deal fails

updated 07:55 am EDT, Fri May 14, 2010

Google may lose money if FTC bans AdMob deal

Google will pay AdMob $700 million even if its acquisition deal falls through, CEO Eric Schmidt said at the company's annual shareholder meeting [reg. required]. The executive confirmed a circulating rumor and revealed that a "kill fee" was in place that would pay almost as much as the $750 million buyout price. He justified the gamble by expressing confidence in the buyout plan itself.

"We don't expect to pay any kill fee because we expect these things to get approved," Schmidt said.

The high contingency fee reveals Google's determination to land AdMob at all costs, which it did after Apple missed its chance just days before. Paying AdMob the large amount would still benefit Google even without a takeover, as it would guarantee a healthy mobile ad market that supports Android apps and fuels more searches on Google.

Schmidt's confidence is nonetheless undermined by the Federal Trade Commission's investigation of the deal, which most now believe is likely to oppose the deal. Google's main hope so far is that Apple's iAd justifies the deal by proving that there will still be significant competition after AdMob is no longer independent.

At the same meeting, Schmidt also revealed that Android's sales rate has grown slightly in the past few month, growing to 65,000 Android phones shipped per day versus 60,000 in February. Schmidt didn't explain specifically why it had increased, but the Droid Incredible's launch at Verizon along with other phone additions are probable factors.



By Electronista Staff
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Comments

  1. slapppy

    Fresh-Faced Recruit

    Joined: Mar 2008

    -1

    More and more like MS

    Ready to waste money to do anything that can help monopolize a market.

  1. Zanziboy

    Forum Regular

    Joined: Aug 2008

    -3

    Apple vs. the Clones: The Sequel

    Google is the Microsoft of the mobile phone industry: inferior software, inferior hardware, and cheap prices.

  1. papasmurph

    Fresh-Faced Recruit

    Joined: May 2010

    -1

    Crazy deal

    AdMob doesn't have anything Google needs anyway, so it sounds more like a "competition snuffer" deal to me.

    Regarding "Paying AdMob the large amount would still benefit Google even without a takeover, as it would guarantee a healthy mobile ad market that supports Android apps and fuels more searches on Google."

    That's a terrible excuse for an equally terrible decision. AdMob will do that anyway if they can make money out of it, and AdMob is already very profitable and doesn't need $700M other than for the owners new yachts and islands.

  1. facebook_Ashok

    Via Facebook

    Joined: May 2010

    -1

    anything but apple

    apple is the new microsoft, google is the new apple. microsoft is the new ibm.

    microsoft has grown too large, and is a lumbering giant. google's been out-innovating everyone else. apple looks forward to contain its system, and desperately looking to jump into a hole.

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