When Google, king of the mobile maps, shelled out $1 billion to buy Israeli social mapping company Waze, the first question for many was: Where’s the anti-trust ruling?
After all, Google is a leading digital maps provider, and Waze was one of the few innovators actually catching up with fellow digital cartographers Nokia, Apple and Microsoft. An American consumer watchdog wrote (pdf) to the US Department of Justice (DOJ) noting that the acquisition would “remove the most viable competitor to Google Maps in the mobile space.” The watchdog quoted the company’s CEO telling reporters “we’re the only reasonable competition to [Google].”
As of now, Google isn’t under any government scrutiny. But consumer pressure and probable complaints from competitors like Facebook, which also considered a bid for Waze, are bound to change that. Google may have also invited scrutiny by pushing the limits of a loophole in the reporting requirements of anti-trust law.
When one company acquires another, it typically needs to file a form notifying anti-trust authorities at DOJ or the Federal Trade Commission. But Google, according to law professor Steven Davidoff, relied on an exemption for foreign companies that earn or possess sales and assets worth less than $70.9 million in the US. While this is technically true of Waze, Davidoff and consumer advocates think that valuing the company at $1 billion means its US intellectual property is at least worth more than the minimum for anti-trust consideration.
Part of the challenge will be figuring out how to define the market for digital maps, which affects Google-Waze’s market share: Does Google-Waze compete just with other smartphone maps, or directly with Rand McNally’s paper atlas, or Garmin’s standalone GPS units? Is the market limited to products offering turn-by-turn directions, which would put the combined Google-Waze deal behind Telenav in terms of market share, at least in the US? Does the service only compete with other social maps that are driven by user data?
These questions will form the groundwork of any battle over the Waze acquisition. If the government does investigate and find that Google’s move was anti-competitive, it could force the company to share more data with competitors, restrict how Google integrates the two companies, or even unwind the deal entirely.
But Google was on its toes. By moving ahead of the government and not filing for review in advance, Google may have made the deal harder for authorities to pursue; they’re less likely to block a sale that’s already happened.