Why Is Google Paying $1.1 Billion for Waze?
Google Inc. (NASDAQ:GOOG) is reportedly acquiring map-software provider Waze Inc. in a move to secure its dominance in the mobile mapping arena while simultaneously preventing rivals Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) from scooping up the company.
Waze uses data from its 400 million users to provide incredibly accurate and detailed traffic information. The combination of mapping and social features would allow Google to improve its mobile mapping capabilities and further ensure its success over Apple’s notoriously bad mapping app. The acquisition will prevent Facebook or Apple from buying the company while eliminating a threat to its own Google Maps.
Waze’s mobile app works on Apple’s iOS and Google’s Android devices, providing users with traffic alerts and alternate routes while generating revenue from location-based advertising. Using input from users, the app also provides information about roadwork, speed traps, and gas prices. The start-up was formally based in Israel, but moved its headquarters and operations to the U.S. Waze’s mapping app gained 32 percent of its users through Google’s Android devices, and 6.3 percent of users on Apple’s iPhone in the past year.
This acquisition will help Google keep its lead in mobile mapping. Apple’s own foray into mobile mapping ended in disaster, with its map software becoming notorious for routes that got users lost, faulty landmark searches, and no public transportation routes. Before launching their own mapping app, Apple had included Google Maps in its core iPhone applications. After, Google launched a competing Google Maps app that’s available for download in Apple’s App Store.
The move also heads-off the possibility of competition in mobile mapping from Facebook. The world’s largest social network, which currently doesn’t offer a mapping service, reportedly offered $1 billion for the start-up last month. “The rivalry between Google and Facebook is escalating,” Andrew Frank, an analyst at Garter Inc., said. “This will be seen as another skirmish in an increasingly aggressive competition, which should ultimately benefit consumers and advertisers.”
The $1.1 billion deal is expected to be announced today. Neither Waze nor Google have commented on the deal as of yet.