An 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.