Google’s Waze acquisition could be in danger because of risky filing tactics

The idea that Google could lose ownership of Waze less than ten days after buying it for a rumored billion dollars might sound incredible, but that’s the intriguing possibility raised by a law professor from Ohio State University writing in the New York Times.

The law requires companies to make what’s known as a Hart-Scott-Rodino filing for any intended acquisition so that the proposed deal can be checked for anti-trust issues before it takes place. Google apparently didn’t make this filing.

According to a person close to Google, the company skipped the Hart-Scott-Rodino filing by relying on an exemption. This filing is not required if the acquisition is of a foreign company that has sales and assets in the United States of less than $60.9 million. Waze is an Israeli company with headquarters in Silicon Valley, so it comes under this test.

Waze probably doesn’t have $50 million in revenue worldwide, yet the test also looks at assets. Given that Waze is worth $1 billion, it is hard to see that the value of its intellectual property in the United States business doesn’t meet the test. And the F.T.C. has previously indicated that companies should include this type of intellectual property in informal guidance … 

Professor Steven M. Davidoff at the Michael E. Moritz College of Law at Ohio State University says that as both Facebook and Microsoft were both reportedly in the bidding, Google may have wanted to close the deal as quickly as possible on the ‘easier to get forgiveness than permission’ principle. Prof Davidoff says this was a risk.

But given the publicity over the acquisition, the government will almost certainly step in to review. Consumer groups are circling, and the Consumer Watchdog Group has written the government to ask for an in-depth review. […] As with previous deals, the government can force Google to sell Waze, or put other restrictions in place, if there is a problem. […]

At the least, this all means that the Waze acquisition is likely to get a thorough review by the government. The battle will now begin. That Google will keep Waze without restrictions is no certainty. But the government faces a challenge. If it does decide to try to unwind this acquisition, Google is going to push the bounds of the law as hard as it can. The future of map search is at stake, and Google may not be evil, but this is business.

Should be an interesting one to watch.

(Via Techmeme.)