The US Federal Trade Commission (FTC) is investigating Google's $1.3bn acquisition of the crowdsourced traffic-mapping and navigation company Waze, the search company has confirmed to the Guardian.
The FTC's actions follow demands from consumer groups concerned that the takeover by Google, which already dominates online mapping – notably in the US – could corner the market by absorbing the Israeli startup, which boasted earlier this year its only real competitor was Google.
Though Waze's revenues are below $70m, the level at which an FTC investigation would automatically be triggered, the watchdog is entitled to investigate any takeover that it thinks could restrict consumer choice.
The investigation is the latest in a series of antitrust and other regulatory scrutiny being applied to Google in the US and Europe. It is still discussing a consent decree with the FTC from January intended to block the potential abuse of "standards-essential" patents by its Motorola subsidiary, and in Europe faces a deadline this week over its proposals to change how it presents search results, under an investigation by the antitrust group in the European Commission. Meanwhile, European privacy regulators in France, Spain, Germany, Italy and the Netherlands are threatening fines or investigations. The FTC is also investigating whether it has abused its dominance of the online advertising market in both text and display ads through its ownership of DoubleClick, bought for $3.1bn in 2007.
Google said when it announced the Waze purchase earlier this month that it would be keeping Waze as a separate unit "for now". The FTC could also instruct the two companies to remain separate while it carries out the investigation.
Immediately after the takeover was announced, the US pressure group Consumer Watchdog wrote to the Department of Justice, arguing that "Google already dominates the online mapping business" and alleging that the company "was able to muscle its way to dominance by unfairly favouring its own services" ahead of competitors, through its power in the search business.
Instead the FTC seems to have decided to investigate whether a Waze takeover would act against the interests of consumers by reducing market choice. Waze is a smartphone app with about 50 million active users worldwide, compared with a much higher figure for Google – and for rival mapping services from Finnish handset maker Nokia, Microsoft, and specialist satnav makers such as TomTom. The app company is thought to have been the subject of takeover approaches from Facebook and Apple in the past 12 months.
Speaking in January, Waze founder Uri Levine said: "There are only four companies in the world that can create maps, and it's an expensive business: Nokia and TomTom, which have acquired companies for billions of dollars; Google; and Waze. Of these four companies, 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."
Waze's users are particularly devoted to the app, which gives real-time information about traffic buildups based on its own users' data provided both passively from the handset's GPS data and actively by users inputting details of traffic buildups, accidents and speed traps.
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image: © Aaron Parecki