Total Pageviews

Sunday, June 9, 2013

Google Is Close to Acquiring Waze, a Rival in Maps

Google, which dominates the market for online maps, is close to a deal to acquire Waze, a largely Israeli company that has developed a social mapping service that is popular with drivers seeking to find the best route given actual traffic conditions.

The proposed acquisition, for a price of more than $1 billion, could be announced early this week, according to three people with knowledge of the discussions who spoke on the condition of anonymity because the deal was not final.

Waze, which was previously in discussions to sell itself to Facebook, attracted the interest of the bigger technology companies because of the social nature of its maps. Waze’s technology, which is available only on mobile devices, uses voluntary GPS tracking of its users and their live reports about accidents and other road hazards to dynamically adjust routing to get users from point A to point B in the shortest possible time.

Waze is officially based in Palo Alto, Calif., but has extensive operations in Israel. It is particularly strong outside the United States, claiming to have about 47 million users globally. In Israel, nearly 9 in 10 registered drivers have used the service, according to the company.

Many of Waze’s maps have been created by passively tracing the routes of its users via GPS, but about 70,000 volunteers also submit edits to improve its maps, much the way volunteer editors contribute to the online encyclopedia Wikipedia.

Google also uses volunteers to improve its maps, but real-time traffic and route adjustments have been a weakness. At Google’s annual developers conference last month, the search giant unveiled a new mobile version of Maps that includes more real-time traffic information.

Still, Google is far and away the leader in online mapping, and its interest in Waze could be a defensive move, to keep mapping expertise to itself. Facebook, for example, already has an extensive partnership with Waze, and had been interested in the company’s technology and rabid fan base as a way to extend its mobile presence.

It’s unclear whether the deal would face antitrust problems, given Google’s already strong presence in online maps.

Waze, a tiny company with about 100 employees, has struggled to generate revenue from its maps. It has experimented with ads for gas stations and fast-food restaurants that are along the route, but has found no reliable source of income.

“Their biggest issue is to grow their active user base,” Marc Prioleau, a strategic consultant in the navigation industry, said in an interview last week as rumors of a potential sale of Waze were swirling. “The technology could really be leveraged inside Google, or Facebook’s one billion users, or Apple’s iPhone.”

Waze had recently signaled that it needed to raise capital in some fashion to expand its operations, either through another round of venture financing or a sale of the company.

Waze’s previous venture investors included Kleiner Perkins Caufield & Byers, BlueRun Ventures, Magma Venture Partners and Vertex Venture Capital.