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Google and Microsoft went toe-to-toe yesterday on Capitol Hill, jawing over Google's proposed $3.1bn merger with online ad firm DoubleClick.

Speaking before a Senate subcommittee that handles antitrust issues, Microsoft said that the merger would hinder competition in the online ad market and endanger the privacy of people everywhere, giving Google exclusive control over the largest database of user information ever assembled.

Meanwhile, Google said the deal would empower consumers, enliven small businesses, and promote free speech.

That free speech bit has us doubled over with laughter, but it's hard to side with Microsoft. The Redmond outfit - which was slapped by the DoJ for monopolistic practices in the operating system market - reportedly made a bid for DoubleClick and recently nabbed another online ad firm, aQuantive, in a deal worth $6bn. The Federal Trade Commission has approved the Microsoft-aQuantive merger, but it's still mulling over the Google-DoubleClick pact.

"I will be the first to admit that Microsoft is not disinterested in this issue," said Microsoft general counsel Brad Smith.

Smith voiced his displeasure for the merger before the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights. Since Google already dominates search advertising and DoubleClick maintains a firm grip on internet banner advertising, Smith said, a combined company would have an undue level of control over a market that's expected to top $54bn by 2011.

"What are the economic implications of allowing the largest internet company in online advertising to acquire it's most significant competitor?" Smith asked the committee. "If Google and DoubleClick are allowed to merge, Google will become the overwhelmingly dominant pipeline for all forms of online advertising." He claimed that a combined company would control 70 per cent of the search ad market and 80 percent of the banner ad market.

He insisted this would "be bad" for web publishers, web advertisers, and consumers. Most importantly, he said, the merger would threaten end user privacy.

"Today, it's generally believed that Google and DoubleClick have amassed the two largest databases of online user data in the world," he said. "With this merger Google seeks to record nearly everything you see and do on the internet and use that to target ads."

Then he added that a combined Google-DoubleClick database would throttle competition from rival companies - like Microsoft. "These privacy issues in fact have antitrust consequences," he said. "This concentration of user information means that no other company will be able to serve ads as profitably."

And Google's take on the matter?

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