Google faces FTC antitrust investigation following Waze acquisition
$1.1bn deal was completed mid-June but may allow search giant to unfairly dominate the market
Monday 24 June 2013
The $1.1bn acquisition of Israeli-based map app Waze by search giant Google will be the subject of an antitrust investigation by the US Federal Trade Commission (FTC).
“Approval of the Waze deal can only allow Google to remove any meaningful competition from the market,” said the letter. “It will hurt consumers and hinder technological innovation.”
The FTC’s investigation will have to determine whether or not the acquisition might negatively impact consumers by reducing market choice and creating a monopoly for Google.
After acquiring Waze, Google promised that they would run the company as an independent organization “for now”, before adding that they were exciting about “the prospect of enhancing Google Maps with some of the traffic update features provided by Waze.”
These features are founded on Waze’s use of crowdsourcing, encouraging its users to report accidents, fuel prices and route times. The Guardian reported that Waze founder Uri Levine described these features as allowing the company to compete with Google:
“Of [the four companies in the world that can create maps], Google and Waze do not care how much it costs to keep the maps up-to-date: Google because it has a lot of money, and Waze because it relies on the community."
Google does not disclose the amount of revenue it generates by licensing its maps to other apps and websites, but claims that its services are used by more than a billion people.
Incorporating Waze would certainly expand Google’s control of the market, but as The Register have pointed out Waze’s business model was always to find a buyer – meaning that the Israeli company could never have been a serious competitor to Google.
Insider reports had suggested that other potential buyers of Waze included Facebook and Apple, meaning the FTC’s antitrust investigation may instead focus on whether or not Google bought the company solely to frustrate their competition.
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