The merger of the world’s most popular search engine and the industry leader in matching ads to people’s Internet activities has put renewed pressure on Microsoft to win its hostile bid for Yahoo!

"We are thrilled that our acquisition of DoubleClick has closed," said Eric Schmidt, Google’s Chairman and Chief Executive Officer. "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, while improving the relevance of advertising for users."

The deal, initially announced in April 2007, was finalised after the European regulators signed off on the deal. The European Commission concluded that the transaction "would be unlikely to have harmful effects on consumers either in ad serving or in intermediation in online advertising markets … 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."

US regulators approved the deal last year after Google ended a bidding war with Microsoft by agreeing to pay $3.1 billion to acquire DoubleClick. The US federal Trade Commission said at the time that they could not prevent the acquisition as Google and DoubleClick "are not direct competitors in any relevant antitrust market." The panel members voted 4-1 to allow the deal to go ahead.

Speaking in April 2007, Microsoft opposed the merger stating that it would "raise serious competition and privacy concerns in that it gives the Google DoubleClick combination unprecedented control in the delivery of online advertising, and access to a huge amount of consumer information by tracking what customers do online."

Those concerned about the deal also raise questions about the privacy of Internet users. In a practice common in the industry, DoubleClick installs cookies on internet users’ computer in order to track the pages they view. Google could effectively merge this data with its own ability to store search terms and identify users through IP addresses. The company would then have more information on internet users than ever before.

Oliver Bishop, CEO of media company Steak, however, believes that the merger could help small businesses advertise more effectively on the web.

"I’m excited about this deal. It has the potential to do for display advertising what Google has already done for search. Namely, bring it to the masses. I expect display advertising will now become more accessible to small and medium sized businesses. As with search, the size of your marketing budget will not be a barrier to display advertising online," he said.

According to Bishop the merger could also progress the advertising industry.

"This deal could break another important barrier - that between branding and direct response. The cutting-edge tracking and reporting this deal brings, will empower advertisers to understand how their different advertising buys interact with one another and their combined affect on sales. It’s no longer about direct response or branding. It’s about how every piece of your marketing and communication work together and impact one another to drive purchasing decisions. Add to that the potential for enhanced targeting and personalisation of ads, and I believe the Google/DoubleClick deal could have a huge influence on growing the whole online advertising market," he said.