What Will Google Get for Its $1.3 Billion Acquisition of Waze?

Waze logoAn Israeli business website/publication Globes.co.il is reporting today that Google will acquire social mapping app Waze for $1.3 billion. The pub says it’s all but a done deal:

Sources inform ”Globes” that Google Inc. will acquire Waze Ltd. for $1.3 billion. The acquisition of the Israeli navigation app and traffic report start-up will be completed after months of reports that Waze would be sold to either Google or Facebook Inc. 

Ra’anana-based Waze has almost 50 million users. This is a big number for an Israeli company, which probably helped it achieve the hoped-for exit.

Facebook was apparently very close to buying Waze for roughly $1 billion. However negotiations broke down when Facebook allegedly refused to allow the company to remain in Israel. Google has an Israeli office and is reportedly willing to keep employees there.

Waze also has offices in California as well.

Waze would have been a huge acquisition for Facebook, which could have deployed it as a social mapping and navigation tool, adding a key asset to its mobile offerings. Google doesn’t need Waze at all. So what does the company get for its $1.3 billion?

It keeps Waze out of the hands of Facebook and Apple. It also gets a global community of users who can potentially help Google improve the accuracy of maps and directions through social feedback.

Waze was just starting to “monetize.” Now the pressure’s off: Google can simply pump local-mobile ads into Waze. But that begs the question: Will Google maintain Waze as a separate app or simply integrate Waze’s capabilities over time into Google Maps?

If Google gets rid of Waze the app/brand it’s very likely that its devoted community will dissipate and the primary value of Waze for Google will diminish over time. (On a related note, even though it has sought to maintain and leverage the Zagat brand, Google appears to be struggling to capture local reviews.)

Because Google has already invested so much in maps and built the leading platform globally, the benefits of buying Waze are relatively modest. My sense is that the primary motivation and driver of the acquisition is defensive: to keep Waze out of the hands of a rival that could use it to challenge Google Maps.

You can follow any responses to this entry through the comments feed.

6 Responses to “What Will Google Get for Its $1.3 Billion Acquisition of Waze?”

  1. Will Google's Expected $1.3 Billion Waze Acquisition Be Allowed? says at

    [...] argued yesterday on my personal blog Screenwerk that among the range of parties interested in Waze Google needed it least. (Facebook and Apple [...]

  2. Will Google’s Expected $1.3 Billion Waze Acquisition Be Allowed? | Search Engine Optimization & Internet Marketing (SEO & SEM) Blog says at

    [...] argued yesterday on my personal blog Screenwerk that among the range of parties interested in Waze Google needed it least. (Facebook and Apple [...]

  3. Will Google’s Expected $1.3 Billion Waze Acquisition Be Allowed? ,Vancouver Island, Canada says at

    [...] argued yesterday on my personal blog Screenwerk that among a operation of parties meddlesome in Waze Google indispensable it least. (Facebook and [...]

  4. Marketing Day: June 10, 2013 says at

    [...] What Will Google Get for Its $1.3 Billion Acquisition of Waze?, Screenwerk [...]

  5. David Mihm says at

    Totally a defensive move.  There may be some minor improvements Google can integrate either into, or through, Mapmaker.  But this keeps them far, far ahead of any mapping rival for at least another 2-3 years.  I predict it gets mothballed within 18 months.

  6. Greg says at

    I agree… I couldn’t see Google maintaining Waze over the long term.

  7. Marketing Day: June 10, 2013 ,Vancouver Island, Canada says at

    [...] What Will Google Get for Its $1.3 Billion Acquisition of Waze?, Screenwerk [...]

  8. Marketing Day: June 10, 2013 | Uk Marketing says at

    [...] What Will Google Get for Its $1.3 Billion Acquisition of Waze?, Screenwerk [...]

  9. wavelet says at

    A couple of comments:
    1) Re why negotiations with FB stalled: According to local info, beyond the “keeping the company in Israel” condition, FB was only willing to do a cash+stock deal rather than pure cash, and at a slightly lower price. Not sure why FB was adamant about not opening an R&D office here, since virtually every other major US-based tech company has one, but they are — they sent a group of HR & R&D people here recently to recruit dozens of people to relocate to Silicon Valley, and I met a couple who said this was simply FB policy for now.

    2) re “Google doesn’t need Waze at all.” Not necessarily true. Waze has a granted patent (2009) for crowdsourced navigation (*). While Google could of course replicate the functionality, it couldn’t be done within just a few months, and It may be difficult to circumvent the patent (especially with deep pockets to defend it). There’s also a very interesting additional patent on using crowdsourced data to find parking spots and estimate parking time.

    Here in Israel, where 50% of the drivers (that’s of _all_ drivers, not just smartphone or GPS users) regularly use waze, there’s nothing that’s close to its nav. accuracy (2-hour trips’ ETAs are predicted to within 3-4min with very few exceptions) or map accuracy. 

    (*) I personally know of a few prior arts for some of the content of the patent, but not for the system as a whole.

    3) re “the benefits of buying Waze are relatively modest. My sense is that the primary motivation and driver of the acquisition is defensive: to keep Waze out of the hands of a rival that could use it to challenge Google Maps.”
    Well, defensive move is certainly a big reason, but according to local rumors, a significant reason for the large price tag is that Google really wanted Waze integrated in time for Android 5.0 — Google Maps is currently perceived as leading in the space, due to Apple’s perceived iOS Maps snafu, and they want to make sure to maintain that.

    4) @David Mihm, re “I predict it gets mothballed within 18 months.”, that might have made sense if they’d paid $30M, but not after paying $1B.

  10. Greg Sterling says at

    I was obviously unaware of the IP, which does justify a slightly higher price if only to avoid litigation or licensing demands down the line. I certainly understand why Waze would rather have been bought by Google (cash + Israel) vs. FB under the circumstances. I still believe Google will ultimately shutter Waze unless Waze performs unexpectedly well.

  11. Shiri Yitzhaki says at

    Greg, here is another interesting view provided by globes.co.il for this acquisition – it is meant to promote Google’s ambitious car project. If Google controls your car and your daily travel log it gets as much power in your real life as in your digital life…see here (http://www.globes.co.il/news/article.aspx?did=1000852672&nl=845&utm_source=2&utm_medium=email&utm_campaign=globesAlerts)

  12. Greg Sterling says at

    Thanks Shiri . . . I’m sure Google had multiple reasons for buying Waze — as it always does.

Leave a Reply