"After carefully reviewing the evidence, we have concluded that Google's proposed acquisition of DoubleClick is unlikely to substantially lessen competition," the Federal Trade Commission said Thursday in a statement.
Despite the FTC's go-ahead, the transaction still faces substantial antitrust scrutiny in Europe, and Google has said that it won't close the deal before it has clearance from European regulators. The European Commission has set a deadline of April 2 to complete its review.
The deal, announced in April, will combine Google's leading position in online text ads with DoubleClick's ad-serving tools that help publishers place and track display ads.
Microsoft Corp., AT&T Inc. and other critics have argued the transaction would give Google a dominant share of the rapidly growing online advertising market. Google contends its business doesn't overlap with DoubleClick's and as a result a combination won't reduce competition.
Privacy advocates also strongly opposed the deal because the combined company would hold an unprecedented amount of data on individual Web surfing habits. The FTC said it lacked the legal authority to block the deal on any grounds except on antitrust matters.
The five-member commission voted 4-1 in favor of the deal. Commissioner Pamela Jones Harbour dissented "because I make alternate predictions about where this market is heading, and the transformative role the combined Google/DoubleClick will play if the proposed acquisition is consummated."
Online ad spending is projected to reach $21.4 billion this year, according to research group eMarketer, surpassing the $20.5 billion radio advertising market for the first time. EMarketer expects online ad spending to nearly double to $42 billion in 2011.
The size of the market and Google's bid for DoubleClick has spurred other purchases. Microsoft agreed to pay $6 billion for Seattle-based online advertising firm aQuantive Inc. earlier this year, and Yahoo Inc. bought Internet advertising exchange Right Media Inc. for $680 million in April. London-based advertising giant WPP Group PLC purchased online advertiser 24/7 Real Media for $649 million in May, while Time Warner's AOL bought Tacoda for an undisclosed amount in July.
Shares of Google added $5.88 to $683.25 in morning trading.