Google’s Deal for Waze ‘Will Almost Certainly’ Invite Antitrust Review, Law Prof Says
Did Google’s acquisition of mobile mapping company Waze Inc. for more than $1 billion comply with U.S. antitrust laws and merger review procedures? Maybe not, according to Steve Davidoff, New York Times Deal Professor columnist and professor at the Michael E. Moritz College of Law at Ohio State University. The deal, he added, “will almost certainly” be subject to a review from government antitrust enforcement agencies.
Typically, certain acquisitions are required to be submitted to the U.S. Department of Justice and Federal Trade Commission for review before the deal is closed so those agencies can examine whether the deal would “substantially lessen competition.” The FTC and DOJ can block a deal or require conditions be put in place before allowing it to close to ensure it does not harm competition.
However, the filing is not needed if the company to be acquired is not based in the U.S. and does not have sales and assets in the U.S. of less than $70.9 million, the column said. According to Davidoff, citing a source close to Google, the search giant relied on this exemption with Waze, an Israeli mobile map provider with headquarters in Silicon Valley, and closed the transaction the day it was announced. He continued:
“Waze probably doesn’t have $50 million in revenue worldwide, yet the test also looks at assets. Given that Waze is worth $1 billion, it is hard to see that the value of its intellectual property in the United States business doesn’t meet the test. And the F.T.C. has previously indicated that companies should include this type of intellectual property in informal guidance.
“Nonetheless, Google appears to have taken this aggressive position and is forgoing any antitrust review, instead plunging ahead with the acquisition … Google may be playing hardball with the government here. Psychologically, it may be harder for the government to undo something that is done. And once Google acquires this company, it will become harder to force it to undo any integration it may have done with its own services.”
Davidoff wrote that for Google to combine its Google Maps product with the acquired Waze “cements Google’s lead in map search” and “does so in a big way.” Consumer Watchdog, a nonprofit public interest group, has called for the rejection of the deal because it would ultimately “allow Google access to even more data about online activity in a way that will increase its dominant position on the Internet.”
Davidoff forecast that “given the publicity over the acquisition, the government will almost certainly step in to review.” If antitrust enforcers at the FTC or DOJ do initiate a review, they could require Google to sell Waze or put restrictions in place.
In April, FairSearch announced a complaint to the European Commission laying out Google’s anti-competitive strategy to dominate the mobile marketplace. Google’s acquisition of Waze is yet another tactic in this and would reduce the incentives for entrepreneurs to enter the mobile mapping space and invest in new innovative services that would benefit consumers.
As Davidoff notes in closing, “If [the government] does decide to try to unwind this acquisition, Google is going to push the bounds of the law as hard as it can. The future of map search is at stake, and Google may not be evil, but this is business.”