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Google snaps up Waze to add to mapping service

Published: Tuesday, June 11, 2013 12:37 p.m. CDT

SAN FRANCISCO – Google is buying online mapping service Waze in a deal that keeps a potentially valuable tool away from its rivals while gaining technology that could improve the accuracy and usefulness of its own popular navigation system.

The acquisition announced Tuesday ends several months of speculation as Waze flirted with potential buyers interested in its rapidly growing service. Waze blends elements of a social network into its maps to produce more precise directions and more reliable information about local traffic conditions.

Google Inc. is believed to have trumped two of its fiercest foes, Facebook Inc. and Apple Inc., in the bidding for Waze, which is based in Israel but also maintains a Palo Alto, Calif., office near all three of the Silicon Valley giants.

Financial terms of the deal weren't disclosed. Published reports citing unnamed people familiar with the negotiations have pegged the purchase price at $1.1 billion to $1.3 billion.

That would make Waze the fourth most expensive acquisition among the more than 240 deals that Google has completed in its nearly 15-year history. The only bigger purchases are Motorola Mobility Holdings for $12.4 billion last year, DoubleClick for $3.2 billion in 2008 and YouTube for $1.76 billion in 2006.

The price underscores the increasing importance of digital maps as people frequently check navigation services on their smartphones and tablet computers to help steer them in the right direction. The growing reliance on mobile maps creates more opportunities to show money-making ads, particularly those from local merchants. Google can also link the navigation systems to other applications to help generate more revenue.

Google is the leader in the field, but both Apple and Facebook would like a bigger piece of the market.

In a blog post, Google said the Waze deal had already closed. That suggests government regulators had no objections to the takeover, even though Google already dominates the market and is eliminating an up-and-coming service as a potential competitive threat.

None of Google's previous acquisitions have been blocked by regulators, although a few underwent reviews that lasted nine to 12 months.

Most of the previous regulatory inquiries have centered on Google's dominance in Internet search — a service closely linked to maps — and online advertising.

The deal is a coup for Waze, a 5-year-old service with about 100 employees. It's the latest startup to blossom into a billion-dollar baby. Last month, Yahoo Inc. agreed to buy Tumblr, a blogging service started in 2008, for $1.1 billion.

The acquisition also could help Israel's efforts to stamp the country as a wellspring of innovation.

Faced with limited natural resources, Israel has excelled in technology and fostered a vibrant high-tech culture. The country is a popular destination for global venture capital funds seeking to capitalize on Israel's entrepreneurial spirit, as well as Israeli expertise honed in universities and advanced technology units of the Israeli army.

Technology is now viewed as Israel's main economic engine, accounting for roughly half the country's exports. Israel is even promoting itself as "startup nation."

The Waze buyout ranks among the largest company sales in Israeli history. Chromatis Networks was sold to Lucent Technologies for $4.5 billion at the height of the dot-com bubble in 2000. Lucent wound up closing Chromatis a year later. Last year, computer networking gear maker snapped up Israeli video software company NDS for $5 billion.

Waze will remain based in Israel, according to Google.

Google could lean on Waze to help add more features to its maps. Waze says nearly 50 million drivers in 190 countries use its mapping app to avoid traffic jams and find the fastest way to their jobs and other destinations. The service figures out the most efficient routes by drawing upon information shared by about 70,000 members who help edit the maps and even provide other helpful tips, such as where to find the best gasoline prices.

"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," Brian McClendon, a Google vice president who oversees maps, wrote in the company's blog post.

Waze's sharing tools also could help Google improve its own 2-year-old social networking service, called Plus, as it tries to lure traffic away from Facebook.

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