by MATT GALLAGHER, Red Herring journalist
Google officially announced closing its acquisition of Waze, the Israeli crowdsourcing mapping app, following a hotly contested bidding war with other tech giants, including Facebook, Apple and Microsoft. Though the official price was not disclosed, sources close to the deal told the New York Times the price was $1.03 billion.
It’s a strategic move for Google that gives the search engine valuable real location data, an essential component of mobile marketing. Waze crowdsources real time traffic updates from its community of 50 million users to enhance its mapping application. It will give Google a social component to its maps.
Waze will continue to operate as a standalone app, though it will feed features into Google’s mapping app and Google will use its resources to enhance the Waze app as well. The Waze team will remain in Israel for the time being. Acquisition talks between Waze and Facebook were rumored to have soured over the prospect of a Mountain View relocation. Facebook reportedly offered $1 billion for the mapping app, according to Bloomberg.
“We’re excited about the prospect of enhancing Google Maps with some of the traffic update features provided by Waze and enhancing Waze with Google’s search capabilities,” Google stated in its blog announcing the acquisition. “We’ll also 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. The Waze community and its dedicated team have created a great source of timely road corrections and updates.”
Waze welcomed the move as an alternative to an IPO.
“Choosing the path of an IPO 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,” Waze’s CEO Noam Bardin wrote in the company’s blog. “Google is committed to help us achieve our common goal and provide us with the independence and resources we need to succeed. We evaluated many options and believe Google is the best partner for Waze….”
Both companies reap big on the deal, as it makes Google maps more social while Waze benefits from the high sophistication of mapping technology Google can afford to develop.
The venture community also walked away with fat pockets. Waze raised $67 million from Blue Run Ventures, Magma, Vertex, Kleiner Perkins Caulfield & Byers, and Horizon Ventures. The majority of the acquisition price will be handed to these VCs. Payouts to the co-founders, including Ehud Shabtai, Amir and Gili Shinar, Uri Levine, Arie Gillon, will total less than $200 million, the Israeli online media site Globes reported.