Google-Waze Deal Is in the Crosshairs as U.S. Probes Old Tech Deals

Bloomberg reports the Federal Trade Commission is concerned Google's 2013 purchase of the Israeli company may have been anti-competitive after all

TheMarker
Reuters
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The Waze logo at a W10 event in New York.
The Waze logo at a W10 event in New York. Credit: Rene C. Nielsen/Wikimedia Commons
TheMarker
Reuters

As the U.S. Federal Trade Commission takes a closer look at smaller acquisitions made by American tech giants over the past decade, Bloomberg News reported on Friday that one deal regulators are particularly interested in is Google’s purchase of the Israeli navigation app Waze.

Amid concerns that big tech companies have been unfairly engaging in potential anti-competitive behavior, the FTC ordered last Tuesday Alphabet’s Google unit, Amazon, Apple, Facebook and Microsoft to provide information on acquisitions that at the time they were made were regarded as too small to report to antitrust regulators.

FTC Chairman Joseph Simons said notices being issued to Big Tech companies were intended for research but could lead to enforcement action.

“If during the study we see that there are transactions that are problematic ... we could go back and initiate enforcement action to deal with those transactions,” said Simons.

Tech giants such as Google have come under fire from both sides of the political spectrum on what is perceived as their growing their grip on key technology markets.

Republicans are irked by what they say is a stifling of conservative voices on social media while Democrats are angered by increasing consolidation.

Much of the criticism has focused on massive deals such as Facebook’s acquisition of Instagram and Amazon’s purchase of Whole Foods, but the companies also have spent billions on smaller companies, dramatically changing the competitive landscape in emerging tech sectors.

When it was announced in 2013, the $1.1 billion acquisition of Waze was quickly approved by the FTC. But Bloomberg quoted antitrust experts as saying the regulator would now take a second look at the deal out of concern that it eliminated a fast-growing Google rival and solidified the internet giant’s grip on valuable data.

“It was literally Google acquiring its number one competitor in maps,” Sally Hubbard, director of enforcement strategy at the Open Markets Institute, told Bloomberg. “It was a bad deal that should have been blocked.”

Google, Amazon, Apple and Facebook did not immediately respond to requests for comment.

Acquiring Waze helped Google meet two challenges to its core business at the time arising from the growing use of social media and smartphones. Users of the Israeli company’s mobile app posted frequent updates on traffic and interacted with one another, generating reams of social and location data.

Waze was founded in 2008 by Israelis Ehud Shabtai, Amir Shinar and Uri Levine, and led by CEO Noam Bardin. It counted 47 million users when it was acquired.

Google has kept Waze as a separate service, but the internet giant has used data from the app to improve its ads.

No other companies were cited by the FTC, but all of the tech companies that were named by the regulator bought Israeli startups between January 1, 2010 and December 31, 2019, the period for which it is seeking information.

Google, for instance, acquired Alooma and Velostrata (cloud computing) and SlickLogin (audio passwords). Amazon acquired E8 Storage, CloudEndure (cloud computing) and Annapurna Labs (semiconductors).

Microsoft bought companies including Hexadite (cybersecurity), Cloudyn and Adallom (cloud computing) and Secure Islands (data protection)

Facebook acquired, among others, Servicefriend (artificial intelligence), Dreambit (search engines) and Face.com (facial recognition).

Apple, meanwhile, bought PrimeSense (3D sensing), Anobit (memory controllers) and LinX (camera technology).

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