The U.S. Federal Trade Commission (FTC) doesn't seem too fond of Google's $1.1 billion acquisition of Waze, as it has launched an antitrust probe into the matter.
Waze is an application with 47 million subscribers, using crowd sourcing data to provide up-to-date info about traffic and navigation. Google acquired Waze earlier this month in a deal reportedly worth $1.1 billion, marking it the fourth-largest acquisition in Google's history.
The FTC automatically looks into companies with revenues higher than $70 million. Waze's revenue is below that level, but the watchdog has the authority to investigate any deals that pose concerns of limited consumer choice.
According to the Wall Street Journal (WSJ), Google confirmed that lawyers from the FTC already contacted the company on Saturday, June 22, regarding the Waze acquisition.
Google may have relied on an exemption to sidestep the normal process of notifying regulators about an acquisition before actually announcing the deal. If the foreign company targeted for acquisition has sales of less than $70.9 million, which Waze is unlikely to surpass, filing is not required. Right after the search giant announced the deal, however Consumer Watchdog wrote to the Department of Justice, expressing concerns that Google's acquisition of Waze would in fact eliminate the most relevant competitor to Google Maps in the mobile sector.
"I am writing on behalf of Consumer Watchdog to urge you to block Google's just announced $1 bilion acquisition of Waze, developers of a mobile mapping application, on antitrust grounds if Department of Justice is the agency that ultimately reviews the deal," read the letter addressed to Assistant Attorney General William J. Baer.
"Google already dominates the online mapping business with Google Maps. The Internet giant was able to muscle its way to dominance by unfairly favoring its own service ahead of such competitors as Mapquest in its online search results. Now with the proposed Waze acquisition the Internet giant would remove the most viable competitor to Google Maps in the mobile space. Moreover, it will allow Google access to even more data about online activity in a way that will increase its dominant position on the Internet."
Lawyers familiar with such antitrust probes believe the FTC will not void the deal, as the watchdog would need substantial evidence that the acquisition would significantly trump competition in the mapping market, notes the WSJ. At the same time, it's possible that the FTC asked Google to halt its plans to integrate Waze pending its investigation, adds the publication.
The FTC would first of all need to determine whether Waze became a direct competitor to Google Maps or if Google acquired the mapping company just to prevent rivals such as Facebook from grabbing it.
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