After eight months of review for possible antitrust violations, the Federal Trade Commission on Thursday approved Google’s $3.1 billion acquisition of Internet ad server DoubleClick.

But the European Commission has yet to sign off on the deal.

In a 4-1 vote to close its investigation of the transaction, the FTC wrote in its majority statement:

After carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition.

Besides being the most popular search engine, Google already has a lock on the Internet text ad market with its AdWords and AdSense programs while DoubleClick is the most important player in the third party banner ad server market.

Here’s how we see the Google-DoubleClick deal: 

1. We think the DoubleClick acquisition will make Google a too powerful influence on the overall Internet advertising market to the detriment of both content publishers and advertisers, big and small. Size matters, as all those junk e-mails tell us everyday. Also, arrogance comes with size. Remember how Microsoft once vowed to cut off Netscape’s oxygen supply?

2. Owning DoubleClick will also provide Google access to enormous amount of confidential data of both publishers and advertisers giving it greater leverage. In our view, the FTC seems to underplay this issue.

3. Ad saturation is causing click through rates for text ads to trend lower and with it the pressure on Google to maximize revenues from its assets. Google is a one-trick pony (most of its revenues come from text ads) unlike Microsoft, which has a more diversified revenue stream. So, one of the easiest things for Google to shore up revenues would be to try a bundle or engage in tying, of course only with the altruistic motive of benefiting consumers, publishers and advertisers. When Microsoft bundled its Internet Explorer browser into the Windows operating system, it was finito for the Netscape browser.

4. Google has a very high share price to maintain (around $687 on Thursday). And with it the incentive to engage in hanky-panky increases. Remember, Enron, Worldcom etc were once ‘admired, great and honest’ companies. Of course, this argument would remain valid even if the Google-DoubleClick deal were to collapse for some reason.

The FTC concluded its 13-page statement saying:

The markets within the online advertising space continue to quickly evolve…. Because the evidence did not support the theories of potential competitive harm, there was no basis on which to seek to impose conditions on this merger. We want to be clear, however, that we will closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the Commission intends to act quickly.