Google acquisition of Waze traffic app sparks OFT inquiry

Google's $1bn acquisition of the travel mapping service Waze is to be investigated by the Office of Fair Trading, on top of an inquiry already being conducted in the US by the Federal Trade Commission.

Waze, based in Israel, provides satnav functions with real-time updates to smart phones, and claims to have more than 50 million direct users worldwide. It also supplies anonymous traffic data to Apple's maps service on the iPhone and iPad.

If Google is determined to control more than 25%, or have UK turnover of more than £70m, in the "relevant market" through its acquisition of Waze, the OFT could order it to make divestments to ensure a level playing field for rivals.

But a spokesman declined to say how the OFT defined the "relevant market" for Google's and Waze's business, which could be taken to include stand-alone satnav devices in vehicles or just the services available to smart phones.

The American inquiry was set up within days of the acquisition announcement after pressure from US consumer watchdogs. The FTC is understood to be still considering the competition effects of the takeover.

Google announced that it had bought the company – apparently after a bidding war with Facebook – and this month said it would be integrating reports from Waze users into its own maps.

But so far it has not said whether Waze will continue to provide data to Apple, nor whether the price will remain the same now that the service is in Google's hands.

Waze's chief executive, Noam Bardin, said in 2012 that Waze was "the only reasonable competition" to Google in real-time traffic information.

Fairsearch, a group critical of Google, complained at the takeover, saying: "If Google buys the only reasonable competitor in maps and it continues to buy app makers to further its dominance, how can a large-scale viable competitor to Google emerge?"

Apple previously had been rumoured to have made an exploratory bid for Waze, in late 2012, soon after the release of its own maps service was heavily criticised by users. But it was rebuffed after offering about $500m for the company.

More recently Apple has patented a system of "user-specified route rating and alerts" which could allow it to function without Waze data while anonymously collecting information from iPhone users as they drive.

Meanwhile, Google has also begun putting its own satellite and Street View imagery into the Waze app.

The OFT confirmed that it had issued an "invitation to comment" within 40 days for companies and individuals which an interest in the acquisition.

Google is understood to have received questions from the OFT relating to the takeover. The company declined to comment.