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Google (GOOG) Takes Waze Off the Table for $1.3 Billion

By: , dated June 18th, 2013

Recently, there’s been a lot of drama in the tech world about Waze, the Israeli online mapping company that has grown popular with mobile users. At first, Apple (AAPL) appeared to be on the verge of taking over the company to grow its Apple Maps service, but the talks ultimately fizzled out. Facebook (FB) then nearly took over the company for $1 billion before hitting an impasse regarding the relocation of its Israeli engineering team to Facebook’s U.S headquarters. Facebook had also wanted to acquire Waze to enhance its own mapping service, which currently depends on Microsoft’s (MSFT) Bing Maps.

Now, search giant Google (GOOG) has entered the picture, and is reportedly finalizing the deal for $1.3 billion. However, Google already has its own map service – the industry standard Google Maps – which has led many investors to wonder if Google is simply buying Waze to keep it out of its competitor’s hands.

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What separates 4-year old Waze from the competition is the fact that it is a crowdsourced map service, which allows its users to report on road and weather conditions to other users. This has made it a more reliable source of real-time road information than comparable map services. Apple wanted the service to improve the reliability of its Apple Maps, which have been ridiculed for erroneous directions and incomplete maps. Facebook had bigger plans for Waze, since the social aspect of its maps could be merged with the company’s location-based check-ins and recommendations. Merging with Waze could have allowed Facebook to catch up to social recommendations site Yelp (YELP) very quickly. Meanwhile, Google has both of these strengths already. Its maps are superior to maps by Apple or Microsoft, and its Maps have already been merged with its Places app, which allow for location-based check-ins and suggestions.

Therefore, Google’s acquisition of Waze seems redundant and primarily aimed at asserting its dominance over the online maps industry. Analysts believe that Google could face major antitrust issues if the deal goes through. Waze currently has 47 million users, and has raised $67 million in funding to date from Qualcomm QCOM and several private equity firms. Waze CEO Noam Bardin and a small group of employees currently work at its U.S headquarters in Palo Alto, California, while the other 90 of its employees are still located in Israel.

Google’s indifference to the global location of the bulk of the company’s staff suggests that it intends to allow Waze to remain independent. Although it may integrate some of Waze’s features to enhance the traffic feature of its Maps application, it will likely remain a separate service. Over the past three years, the convergence of mobile technology, location-based services and social media have all made these remaining small companies very valuable. Yahoo (YHOO), for example, has been on a shopping spree over the past year to increase its footprint in all three of these areas.

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Google Calls U.S. Data Request Disclosures a Step Backward for Users
Google asks for more transparency from the U.S. government.

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Leo Sun Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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