Google Inc. (GOOG) has acquired map-software provider Waze Inc., seeking to keep competitors such as Facebook Inc. and Apple Inc. from eroding its lead in mobile-navigation programs.
Terms of the deal for Waze, with offices in Israel and Palo Alto, California, weren’t disclosed in Google’s blog post announcing the purchase today. The price was about $1.1 billion, a person familiar with the transaction said earlier this week.
As consumers shift to smartphones and tablets and away from personal computers, Facebook and Google are increasing efforts to court customers on the move. Waze, whose mobile app solicits input from almost 50 million users to improve directions and display traffic and road-hazard details, would provide social features for Google’s navigation tool. It may also help Google extend its dominance in maps over rival Apple.
“Waze, a crowd-sourced navigation app, should help improve Google’s own mapping technology and offerings, add a unique social layer that is complimentary to the platform and further differentiate Google from the competition,” Naved Khan, an analyst at Cantor Fitzgerald & Co., wrote in a research report today. He rates Google a buy with a $1,030 target price.
Shares of Google fell 1 percent to $881.42 at 2 p.m. in New York. Through yesterday, they had advanced 26 percent this year, compared with a 15 percent gain for the Standard & Poor’s 500 Index.
Google’s Deals
Nate Tyler, a spokesman for Google, and Julie Mossler, a spokeswoman for Waze, declined to comment on the terms of the deal. Google had been discussing a deal with Waze since at least May 23, when Bloomberg News initially reported the talks.
Waze would let Google, owner of the world’s most popular search engine, eliminate a threat to its home-grown navigation app. It would also keep a growing provider of mapping software away from other companies, including Facebook, the world’s largest social network. Facebook, aiming to bolster its own mobile strategy, offered Waze almost $1 billion last month, two people familiar with the matter said in May.
“Google needs to maintain supremacy in maps, as they are a key to mobile advertising,” Andrew Frank, an analyst at Gartner Inc., said in an e-mail. “The rivalry between Google and Facebook is escalating.”
Waze Investors
Waze’s mobile app, which runs on Apple’s iOS operating system and Google’s Android software, alerts users to potential traffic slowdowns or suggests alternative ways to reach destinations. The service also notifies drivers of road work, speed traps other potential hazards, using input from users. With free tools available over the Web and on mobile devices, Waze generates revenue via location-based advertising.
The company’s investors include Redmond, Washington-based Microsoft Corp., people familiar with the matter said last month. Waze raised $30 million in 2011 in a funding round led by Kleiner Perkins Caufield & Byers and Hong Kong billionaire Li Ka-shing’s Horizons Ventures Hong Kong. Earlier investors include Qualcomm Ventures, Magma Venture Partners and Vertex Venture Capital in Israel and BlueRun Ventures in Silicon Valley.
In the U.S., Waze’s mapping app attracted 6.3 percent of users on Apple’s iPhone in April, compared with 32 percent for Google’s navigation tool, according to Onavo Inc., which provides user-engagement data on applications for mobile developers. Waze announced a partnership with IMS Internet Media Services in April to expand in Latin America.
Apple Maps
Apple’s own efforts in mobile maps stumbled last year, when the company introduced new software that was faulted for unreliable landmark searches, routes that got users lost and a lack of public-transit directions. Before Apple added its own program, Google’s map application had been built into the iPhone since its introduction in 2007. Google later rolled out a rival downloadable app for Apple’s devices.
A Google purchase of Waze may still be scrutinized by U.S. regulators for its potential to alter the competitive landscape, Allen Grunes, a former antitrust attorney for the Justice Departmentin Washington, said last month.
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