Google turned heads a few weeks ago when the company announced its acquisition of the Israeli mapping service Waze. Waze has grown rapidly thanks to its innovative user-engagement model, which relies on its users to provide real-time traffic information like backups, accidents and disabled vehicles. And while Google's rivals may voice complaints, as they usually do, the just-completed deal is a boon for consumers and demonstrates the highly competitive nature of the mobile mapping space.
The antitrust litmus test for this deal, as for all acquisitions, is the impact on consumers – not competitors. And consumers will clearly benefit. Currently Google Maps, like some other navigation platforms, offers users some basic traffic updates that help drivers' avoid jams. But Waze's real-time information is more advanced, and Google Maps users could soon be receiving better, more detailed, real-time updates from others traveling on the same road – all for free.
This deal represents an ambitious attempt to combine traditional online mapping used by many players in the sector with Waze's clever community-driven model. This offers a true innovation in mobile navigation.
Not surprisingly, Google's competitors and its normal chorus of professional critics are already crying foul about the acquisition. (Of course, any of them could have acquired Waze but chose not to.) But in this extremely competitive market such a claim is sour grapes when measured against the facts.
The mobile mapping industry is intensely competitive. The current market leader is actually Telenav, whose technology drives AT&T Navigator and Sprint Navigation, among other popular mobile maps. The analytics firm Berg Insight found that Telenav controls 33 percent of the North American market for mobile navigation, while Google and Waze's combined market share would equal only 28 percent. What's more, the Telenav apps, like AT&T Navigator and Sprint Navigation, occupy the default position on many phones and have the full backing of the mobile operators, which control what apps users see on their devices out of the box.
Apple is also a leading competitor and innovator in maps. Recently, Apple announced changes to its Maps app on both the desktop and iOS, as well as partnerships for in-car integration. In less than a year in the maps space, Apple has gained substantial usage, largely by making its own mapping solution the default on all iOS devices. This setting cannot be changed by the iPhone user, and Apple Maps now has the leading market share on IOS, with 43 percent of iPhones according to Nielsen. Any time a user selects an address – in an email or a web browser, for example – Apple serves the map. Google, on the other hand, has always preferred a more open approach, allowing Android users to change the system default.
So the critics have trotted out a theory that integration is harmful, a theory inconsistent with the facts and sound economic policy. They claim Waze's community-gathered mapping data is so unique and non-replicable by any other rival, so no other company can compete. But this theory was raised against Google during its acquistions of DoubleClick and AdMob, and the Federal Trade Commission has repeatedly rejected it.
More broadly, U.S. law encourages companies to make investments that improve products, and doesn't force companies to share their assets or trade secrets with competitors. Finally, it is simply incorrect factually – Waze built their own user community from the ground up, showing that entry is relatively easy when information is coming from users rather than fleets of cars or satellites. And, indeed, there are other players operating on a community-driven model just as Waze does – for example, the Open StreetMap project.
Antitrust law has long recognized that acquisitions, joint ventures and other pairings often increase competition within a market. In no space is this more apparent than the tech sector, where so many popular innovations have come about because of acquisitions. Google's acquisition of Waze, like Facebook's 2012 purchase of Instagram, is just another example of such a pro-competitive deal.
It's likely this acquisition will further energize an already-competitive market by creating a new kind of mapping product that forces rival companies to come up with new ideas of their own. And nothing about this deal makes it harder for competitors to compete or reach consumers. There remain a host of large competitors in the mapping and navigation space, including large map data providers, developers of mobile mapping applications and manufacturers of physical navigation devices.
Through its acquisition of Waze, Google has signaled it will continue to invest and innovate, creating better products for users to outcompete the likes of Apple, Telenav and others in the mobile navigation sector. Whether they succeed or fail, consumers will win.
David Balto is a former policy director of the Federal Trade Commission, attorney-adviser to Chairman Robert Pitofsky, and antitrust lawyer at the U.S. Department of Justice. He has been a senior fellow at the Center for American Progress and has worked with the International Center on Law and Economics, both of which receive funding from many organizations including Google. Mr. Balto has also published research and authored scholarship for Google on technology policy topics, but the opinions here are his own.
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