Liz Gannes

Recent Posts by Liz Gannes

Can Google Reroute Around Regulatory Concerns About Waze Buy?

While we expect Google to announce this week that it will buy the crowdsourced mapping app Waze, it’s not clear how regulators will feel about the two companies pairing up.


Asa Mathat | D: All Things Digital

Competitors and policy wonks agree there are good reasons for scrutinizing the deal, as both companies produce underlying mapping data, as well as consumer-facing navigation applications. But that doesn’t mean it will happen.

“The DOJ should stop this deal, but I doubt they’ll see it,” said Scott Rafer, CEO of Lumatic, which makes the City Maps walking and transit app.

While Google buying Waze would indeed be a defensive move against the broader mobile designs of Facebook and Samsung, Google’s control of the mapping market is overstated, Rafer argued.

“The in-car nav systems haven’t lost all their market share yet, plus Google’s market share on smartphones has gone from more than 90 percent to less than 70 percent since the iPhone 5 shipped,” he said. “They can use that to push back on any market control accusations.”

But big Google deals always get some scrutiny. Concerns about possible delays due to antitrust implications has given potential acquisitions reason to look elsewhere — for instance, Buddy Media, which went to Salesforce.

To add fuel to this particular fire, Waze CEO Noam Bardin, in remarks just two months ago at our D: Dive Into Mobile conference, pitched Waze as the only viable competitor to Google.

Speaking of longtime map providers Nokia/Navteq and TomTom, Bardin said: “The traditional players don’t have a model that’s scalable and they have financial challenges, so Google is out there creating a new standard in terms of quality.”

He elaborated: “We feel that we are the only reasonable competition to them in this market of creating maps that are really geared for mobile, for real-time, for consumers, and for the new world we’re moving into.”

FairSearch, the organization dedicated to making a fuss about Google’s monopolistic tendencies, wrote in a post today:

“FairSearch hopes antitrust officials will see Google’s offer for Waze as evidence of the search giant’s anti-competitive strategy to dominate the mobile marketplace and cement its control over consumer Internet data. And we hope they move to reject the deal in the interest of Internet competition and innovation.”

Waze has 47 million registered users, 32 percent of them active. That is small in the grand scheme of things — not a traditional antitrust target. But one way for regulators to go after the deal would be to argue that Waze is a “maverick” competitor.

The DOJ merger guidelines account for “a firm that plays a disruptive role in the market to the benefit of customers.” And Waze’s social approach to updating maps — its users drive more than a billion kilometers per month, each of them contributing current data about roads, speeds, routes, traffic and disturbances — has definitely shaken up the mapping market.

However, a Washington, D.C.-based policy source noted that much as regulators might want to target Google, a better recent case that fit this bill would have been Avis and Zipcar, and that went through.

But perhaps the best justification for the Waze deal sailing through lies in two things we know to be true:

1) Waze isn’t making much money, sick as users may be of all those Taco Bell ads. Sources said its yearly revenue is in the single-digit millions.

2) Apple and Facebook aren’t interested in buying the company (any more). If Waze were such a competitive threat, wouldn’t they have snapped it up?

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work