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.