Google’s $1 Billion Waze Acquisition To See Antitrust Review
It will probably just be a formality; however, Google confirmed this weekend that its proposed acquisition of social mapping platform Waze will undergo US Federal Trade Commission (FTC) antitrust scrutiny. Waze’s revenues are minimal; but, the acquisition price is surely what got the FTC’s attention.
In addition, Waze becomes one fewer potential mapping challenger in the marketplace. According to the Wall Street Journal, the FTC “is expected to focus on whether Waze would have become a head-to-head competitor with Google, whose Google Maps software is the dominant digital mapping and navigation service around the world, or whether there is any evidence, such as emails, that showing that Google wanted to acquire the company only to keep it out of the hands of rivals.”
There are a number of benefits to Google from the acquisition, including gaining some intellectual property and an army of users who can contribute to improved “ground truth” accuracy for Google Maps. However, one of Google’s primary motivations was almost certainly to keep the company away from Facebook or Apple.
Of course, Facebook had the prior opportunity to acquire Waze and was unable to agree on terms, according to published reports. Facebook apparently offered cash and stock, while Google’s is an all-cash deal. In addition, Facebook reportedly didn’t want to allow the Waze team to remain in their native Israel, while Google will.
During the FTC review, it will likely come out that Google had competitive concerns about Waze going to Facebook. Yet, it will be challenging, given the facts as we understand them, to show that Google actually prevented or disrupted the acquisition. Otherwise, we have limited information about the degree to which Apple, Microsoft or others were serious and active suitors of Waze.
There are still are several independent companies involved with mapping (e.g., deCarta). There are also a number of navigation companies such as TomTom in the market, though none have very strong consumer brands.
As a practical matter, there are essentially three or four big global players in digital mapping from a consumer perspective: Google, Microsoft/Nokia and Apple. These are all powerful, well-resourced companies. Thus, from a formal-legal standpoint, the market looks pretty competitive, which will probably dissuade the FTC from trying to block the deal.
We’ll probably never know whether Waze, in time, could have independently grown into a genuine competitor to Google.
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