Have you heard about Waze, the crowd-sourced navigation app? If not, you’re about to, because Google is reportedly buying this Israeli company for more than $1 billion. This deal that could give Google a major boost in the escalating battle for advantage in the fiercely competitive mobile mapping space — and spite Apple and Facebook for good measure.
Why would Google want to shell out more than $1 billion for a relatively unknown startup? Three reasons: First, Waze’s collaborative, user-based approach to mapping represents a real breakthrough for mobile navigation apps. Second, the company poses a threat to Google’s own popular Maps product, so this acquisition is smart defensive play. Third, by buying Waze, Google is able to keep it out of the clutches of arch-rivals Apple and Facebook, which both have been circling the company in recent months.
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As GPS-equipped smartphones have become increasingly ubiquitous, map apps have soared in popularity. For well over a year, Google and Apple have been fighting an increasingly intense battle for user loyalty in the mobile map space, which explains why both companies have been circling Waze. Because map apps are so widely used, they’ve become a key priority for software companies in the mobile wars.
Waze, a free application currently available on the iPhone and Google Android devices, delivers a unique innovation: By incorporating real-time GPS data from its more than 40 million users, the company delivers highly accurate and useful traffic and navigation information. Users can also edit maps with details like gas prices, speed traps, road construction and traffic accidents.
Think of Waze as the “wisdom of crowds” meets digital maps. ”Join other drivers in your area who share real-time traffic and road info, saving everyone time and gas money on their daily commute,” Waze says on its website. The goal? “To outsmart traffic and get everyone the best route to work and back, every day.” Waze users receive mobile alerts about traffic hazards based on their location.
This “social” component differentiates Waze from the leading mobile map apps, which happen to come from Google and Apple. For this reason, Google’s interest in the company is, in part, defensive. Often, when tech juggernauts like Google, Apple, and Facebook encounter a startup that has developed a product that poses a threat, the easiest solution is to simply buy it and remove the competition.
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That’s what Facebook did when it spent $1 billlion in cash and stock to buy Instagram, which had built a superior and more popular photo-sharing service. “Buying Waze is all defense but great defense wins championships,” observed tech entrepreneur and investor Howard Lindzon.
Google’s purchase also keeps Waze out of the hands of Apple, which could have incorporated the company into its own map service, and Facebook, which might have integrated the app into its giant social network. Facebook reportedly offered Waze nearly $1 billion last month, but the talks apparently fell through over the purchase price.
Waze, which was founded in 2007, has about 100 employees, mostly based in Israel, with offices in Silicon Valley and New York. According to the Israeli business publication Globes, which first reported news of the deal, another sticking point with Facebook was that Waze “insisted that its Israeli employees should continue working in Israel, which Facebook did not accept.”
Waze could reportedly remain an independent app, although some of its features could be incorporated into Google Maps. According to CrunchBase, the company has raised $67 million in venture capital funding, including $30 million in its most recent round, led by Silicon Valley titan Kleiner Perkins Caufield & Byers and Hong Kong billionaire Li Ka-shing. Microsoft was also an early investor, but apparently did not make a bid for the company.