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Google Inc (GOOG) Is Crazy About Waze

There you have it: Following months of rumors about who would acquire Waze, the Israeli-based traffic data start-up, Google Inc (NASDAQ:GOOG) has emerged the winner.

First, rumors swirled that Apple Inc. (NASDAQ:AAPL) was looking to acquire the company, which also happens to be one of the data partners to its controversial Maps app. Apple had already acquired three small mapping companies over the years to put together its service, so adding another one into the mix made some sense at the time.

Google Waze

The speculation turned out to be exactly that. At the All Things Digital conference last month, Kara Swisher bluntly asked CEO Tim Cook if Apple Inc. (NASDAQ:AAPL) had made a bid for Waze. Apple Inc. (NASDAQ:AAPL) has been on an acquisition spree recently, but Waze was never in the running, according to Cook.

The market then turned its attention to Facebook Inc (NASDAQ:FB), as the social network has no in-house mapping service and probably needs one if it hopes to compete meaningfully in local e-commerce. Facebook Inc (NASDAQ:FB) promptly hired the mapping manager that Apple Inc. (NASDAQ:AAPL) fired, so mapping is certainly on its radar. As part of negotiations, Facebook Inc (NASDAQ:FB) had wanted Waze’s team to move to its California headquarters, but Waze preferred to stay put in Israel. That’s fine with Google Inc (NASDAQ:GOOG), as Waze will stay in Israel and operate separately for the time being.

Google has now concluded the episode with a decisive acquisition, which may bolster its mapping lead over its rivals. Google Maps is already the undisputed mapping leader, and integrating smarter traffic data will further strengthen the search giant’s position. Google Inc (NASDAQ:GOOG) just redesigned its web-based Maps platform last month.

Since Waze’s service is crowd-sourced, it inherently benefits from network effects. Tapping into Google Inc (NASDAQ:GOOG)’s vast user base that far exceeds the 47 million that Waze has will only make the service that much better. It’s also possible that once Waze satisfies its contractual obligations with Apple Inc. (NASDAQ:AAPL), Google could preclude the Mac maker from accessing the data.

Big G hasn’t confirmed how much it’s paying, but the total could reach up to $1 billion. Will it be worth it?

The article Google Is Crazy About Waze originally appeared on and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple Inc. (NASDAQ:AAPL). The Motley Fool recommends Apple, Facebook Inc (NASDAQ:FB), and Google Inc (NASDAQ:GOOG). The Motley Fool owns shares of Apple, Facebook, and Google.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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