Google, the world’s leading Internet company, has agreed to acquire Waze, the Israel-based company behind the popular mobile mapping and traffic information app used by approximately 50 million users. The transaction exemplifies the power of going non-exclusive in buyer negotiations and having multiple bidders in a process. After having reportedly rebuffed Facebook’s $1.0 billion offer and news of talks with Apple surfaced, Google jumped in and agreed to acquire the 4-year-old company for an undisclosed sum rumored to be $1.3 billion. Google agreed not only to pay more than competing bidders, but brought an added flexibility around key deal points, including whether the engineering team would be forced to relocate to Silicon Valley or could stay in Israel.
The acquisition of Waze, widely viewed as a defensive play against Facebook and Apple, further strengthens Google’s large lead in mapping services. Mapping is critical to engaging and retaining mobile users who utilize the turn-by-turn directions and geo-location features on a daily basis. Waze gives Google the ability to socialize the mapping experience, bringing user generated and crowd sourced content to Google maps by including traffic information, speed traps, gas prices, and other useful information. The transaction takes Google one step closer to the holy grail of mapping services: intelligent re-routing based on traffic and road conditions.
The acquisition will likely face an anti-trust review from U.S. and European regulators due to the competitive impact this acquisition might have on mapping technology. However, as with the DoubleClick transaction, I suspect this won’t be an issue, at least in the U.S. Europe may present a higher hurdle to clear as Google is currently facing aggressive anti-trust reviews on other matters.
The bigger question is: where does this leave Apple and Facebook?