After failed attempts by Apple and Facebook to acquire Waze, an Israeli social-mapping startup, Google has sealed the deal for a whopping $1.3 billion. Globes, an Israeli financial newspaper, confirmed the sale today, citing unnamed sources. Buying Waze solidifies Google as the uncontested world leader in online mapping.
Waze utilizes global positioning data from users’ smartphones to generate customized maps and instantaneous traffic data. The open-source map can then alert drivers about traffic congestion, construction, road closures, speed cameras, and police presence. “By simply driving with the app open on your phone, you passively contribute traffic and other road data that helps the Waze system to provide other Waze drivers with the most optimal route to their destination,” states the company’s FAQ page. The service currently boasts nearly 50 million users around the globe.
Money was obviously a major factor in the sale, and it seems that Google was the most willing to up the ante. Apple mulled a $500 million offer to buy Waze last January, but CEO Tim Cook denied that a formal bid had been placed. Last month, Facebook offered $1 billion, but only half would have been paid in cash, with the remainder to be in the form of Facebook stock options. Reportedly, Google agreed to pay the entire sum in cash.
The second concern from Waze revolved around the location of their offices. Globes reported:
“Waze insisted that its Israeli employees should continue working in Israel, which Facebook did not accept. Google has already made two acquisitions in Israel, and it has an office here, in contrast to Facebook, which closed most of the companies it acquired, including Israeli start-ups.”
Although officially based in Palo Alto, California, Google’s agreement will retain a Waze office, as well as their CEO Noam Bardin, in Israel for the next three years. After that, Google may absorb Waze into its namesake Google Maps service. “Google will shut Waze down in 2016,” wrote Forbes’ Peter Cohan, “after incorporating Waze’s best technology into Google’s own navigation service.”
There are still hurdles for Google, primarily a U.S. Federal Trade Commission (FCC) antitrust review of the purchase. Allen Grunes, a former antitrust attorney for the U.S. Justice Department said the following in an interview with Bloomberg:
“[Incorporating Waze could] complement a product they already have and make it better, as opposed to representing a leading product they already compete with. [The purchase] could get looked at anyway by regulators because if Google gets it, it’s quite possible Facebook will be in there complaining, even if there isn’t a real antitrust problem.”
Waze is also attempting to monetize its service by adding advertisements for gas stations, fast food restaurants, and convenience stores that their users are bound to drive by. However, blocking Apple and Facebook from a Waze sale is worth far more. “By buying Waze, Google keeps competitors like Apple and others away from the easy out, which would be an acquisition of a company with already-working and reliable technology,” said TechCrunch’s Jordan Crook. “With this deal, Google effectively blocks Apple and Facebook from even having a chance.”
Waze is available for iOS, Android, and Widows Phone, with BlackBerry still in beta testing.