Google announces acquisition of Israeli app Waze

Acquisition comes after months of speculation involving reported negotiations with Facebook and Apple.

June 11, 2013 19:02
3 minute read.
Waze navigation application

Waze navigation application 370. (photo credit: Courtesy Waze)

After months of rumors and speculation as to which global technology giant would charm Israel’s homegrown traffic crowd-sourcer Waze into a partnership, Google emerged victorious on Tuesday, announcing in a blog post that it had acquired the app.

Both Apple and Facebook had reportedly entered negotiations with the Ra’anana-based company in the past year, but failed to broker a final deal.

Though neither Google nor Waze specified the cost of the deal, Bloomberg cited sources valuing it at $1.1 billion, making it one of the largest purchases in Israeli history and potentially netting the Finance Ministry nearly NIS 1b. in tax revenues.

Yet Google’s announcement also raised questions as to how long Waze would keep operating in the country as a separate entity, a point of contention said to have thwarted Facebook’s advances.

“The Waze product development team will remain in Israel and operate separately for now,” Google wrote in its post, signed by VP Brian McClendon. The company would “work closely with the vibrant Waze community, who are the DNA of this app, to ensure they have what’s needed to grow and prosper.”

Waze CEO Noam Bardin, however, seemed to put the prospect of eventual absorption into Google far down the road.

“Nothing practical will change here at Waze. We will maintain our community, brand, service and organization – the community hierarchy, responsibilities and processes will remain the same,” he wrote in his own blog post. “Our employees, managers, founders and I are all committed to our vision for many years to come.”

As long as they continue to run independently, Waze will benefit from Google search results, while Google’s mapping application will incorporate real time data from Waze.

“We are excited about the prospect of working with the Google Maps team to enhance our search capabilities and to join them in their ongoing efforts to build the best map of the world,” Bardin wrote, adding that Google’s leaders “share our vision of a global mapping service, updated in real time by local communities, and wish to help us accelerate.”

He also explained why the prospect of an acquisition by an international company was more compelling than staying independent and going public – the former a move with which 95 percent of Israeli start-ups agree, according to a recent report submitted to the Israel Securities Authority.

“Choosing the path of an IPO [initial public offering] often shifts attention to bankers, lawyers and the happiness of Wall Street, and we decided we’d rather spend our time with you, the Waze community,” Bardin wrote.

Politicians praised the company’s success, and made their own puns in the process.

Prime Minister Binyamin Netanyahu congratulated Waze for “putting Israeli technology on the world map,” while Science, Technology and Space Minister Yaakov Peri offered his hope that it would continue its endeavors in Israel, without “recalculating the route.”

Having attracted nearly 50 million users since its founding in 2008, Waze became a hit with drivers in Israel and abroad for offering accurate maps and suggesting the best driving routes given real-time traffic conditions. Its innovative secret: following its users. By tracking how fast drivers are moving on which roads, Waze is able to figure out where the worst traffic is and direct its users accordingly.

It can also easily detect when new roads have been built, account for construction and allow drivers to alert one another to road hazards and police.

That innovation became a major draw for potential buyers such as Apple, Google and Facebook. Apple, in particular, stumbled in September with the release of its own error-ridden mapping application for the iPhone. Following an outcry, Apple CEO Tim Cook apologized and directed iPhone users toward Waze as an alternative, but a rumored acquisition offer for $400 million in January never materialized. Facebook, whose own reported billion- dollar overtures never came to fruition, hoped to obtain Waze’s robust location based usage data to boost its increasingly mobile-oriented strategy.

The Waze acquisition will help Google, whose own map application for iPhone sprang to the top of the download charts when it was released, keep its competitive edge.

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