Google’s $1.1 billion acquisition of social mapping startup Waze has drawn the attention of the Federal Trade Commission after all. The Wall Street Journal reports today that Google has been contacted by FTC lawyers intending to conduct an antitrust review of the acquisition. Google declined to comment but did confirm to the WSJ that it has been contacted by the FTC over the deal. The news was reported earlier by the New York Post which cited two sources “close to the situation”.
According to the WSJ, which said it talked to lawyers familiar with government antitrust investigations, the FTC may have asked Google not to integrate with Waze, pending its review. It also notes that Waze’s revenue was too low to trigger an automatic review by the FTC — but that does not stop the agency stepping in to examine deals after they close, as it now has.
Google stepped in and picked up Waze earlier this month, ending months of acquisition rumours in which the service had been linked with a variety of other suitors — including Facebook, Apple and even Microsoft.
In the end Mountain View walked away with Waze’s crowdsourced traffic data — saying it intends to incorporate Waze’s data into its Google Maps product, likely to enhance the traffic prediction feature. Google also said some of its own mapping technology will be incorporated into Waze. Whatever else Mountain View plans for Waze’s team and data remains to be seen, but there are plenty of areas for Google to explore.
So why is the FTC getting involved now? Google’s purchase of Waze may have attracted the FTC’s attention because its own mapping service is already so dominant globally, with some billion users vs the 45 million app downloads Waze had previously reported.
By buying Waze Google removes a potential competitor to its service — assuming Waze could have grown its user-base to become a head-to-head competitor with Google Maps. The WSJ reports that the FTC would have to determine whether Waze could have managed to challenge Google in that way, or whether there is any evidence showing Google wanted to acquire Waze specifically to prevent a rival buying the company.
Other mapping competitors to Google include Nokia, which acquired digital mapping service NavTeq for $8.1 billion back in 2007; TomTom which licenses mapping data to Apple; and the non-profit OpenStreetMaps crowdsourced map service, which is free to use.
Despite the FTC probe, the WSJ suggests it’s unlikely the FTC will ask Google to unwind the Waze deal — being as it would have to uncover evidence the acquisition would significantly damage competition in the mapping market.