Why Google Inc (GOOG)’s Bet on Social Mapping Is a Smart Move

Google is the undisputed leader in map services; it has far better navigation and traffic data than any other competitor. Buying Waze will strengthen its advantage over players like Apple and Facebook, which were also interested in acquiring the Israeli startup. Google Maps is already much better than the competition, and after the Waze acquisition it will become almost unreachable. It´s a defensive move, but a very powerful one.

Who is to say that Google, with more than $50 billion in balance sheet cash, shouldn´t spend something like $1.1 billion or $1.3 billion to secure its leadership in mapping? This is an area the company understands and dominates; maps will become increasingly more social and dynamic over the next years and Google will be in a position of strength to capitalize that trend thanks to the Waze acquisition.

Bottom line

When Google spent 1.6 billion for YouTube in 2006, most analysts said the price was too high for a company making no money in an area in a permanent state of change and innovation. That may have been true based on the information available at the time, but that´s precisely what visionary leaders do, seeing into the future what other people miss.

By consolidating Google´s leadership in mapping, the Waze acquisition could be another smart strategic move with powerful long-term implications for the company, and we may be able to fully appreciate that a few years from now.

Andrés Cardenal owns shares of Apple and Google. The Motley Fool recommends Apple, Facebook, and Google. The Motley Fool owns shares of Apple, Facebook, and Google.

The article Why Google’s Bet on Social Mapping Is a Smart Move originally appeared on Fool.com and is written by Andrés Cardenal.

Andrés is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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