Not the o-quinone diazide 1 but the title molecule 3 results from the deprotonation of diazonium salt 2. Compound 3 is the first preparatively realized example of a 1,2,3-oxadiazole. The high likelihood of the formation of 3 is probably due to the destabilization of the o-quinone and o-quinone bismethide structures in 1, which are passed over in favor of the lower energy naphthalene unit in the transformation to 3.
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Blocher et al. (1991) studied this question.
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