Google acquisition keeps Waze out of rivals' hands

SAN FRANCISCO — Google Inc. snatched a popular mobile mapping service from the outstretched hands of its Internet superpower rivals, securing its dominance in real-time navigation information.

Tuesday's $1-billion deal for Waze and the weeks of fevered speculation leading up to its acquisition signal the growing importance of digital maps, apps that are shaping up to be among the most important ones people use on smartphones and tablets.

Waze, which helps drivers find the fastest and easiest routes, was being wooed by Facebook Inc. and Apple Inc., among others. But Google dug deep into its cash box to make the tiny Israeli company the fourth-biggest purchase in Google's 15-year history.

Travelers' increasing reliance on road apps to guide them is creating new opportunities for Internet companies to advertise deals, especially from local merchants, and show other points of interest.

Maps are on their way to becoming the main onramp for information and services on mobile devices, said industry analyst Julie Ask of Forrester Research, a consulting firm.

"A growing percentage of time will be spent discovering, accessing and engaging content within maps," Ask said.

The Waze purchase could extend Google's lead in maps by making them more reliable and useful, thereby encouraging people to spend even more time on Google products, analysts said.

"We think Waze will help add to Google's leadership position in global maps, which we see as very strategic," S&P; Capital IQ analyst Scott Kessler said.

Waze, a free app available on Apple mobile devices and on devices powered by Google's Android software, soared in popularity by folding social networking into digital maps.

Waze, which has about 50 million users in 190 countries, helps drivers "outsmart" traffic, Brian McClendon, Google's vice president for geo-products, said in a blog post.

Waze tracks traffic flow by monitoring users on their GPS devices. A dedicated community of more than 70,000 drivers volunteer to edit maps to help fellow drivers make up-to-the-minute adjustments to avoid time-sucking obstacles in their path, such as road construction and closures, traffic congestion, police cameras and speed traps.

Google plans to add some of the Waze features to Google Maps, but the Waze app still will be available separately. The Waze team will remain in Israel and will operate independently "for now," McClendon said.

Waze is most extensively used in Israel, where nearly 9 in 10 drivers rely on it. Waze estimated that about 10% of drivers in Los Angeles use the service. It is particularly useful in areas of the world that are less accessible and therefore more difficult to navigate.

Financial terms were not disclosed, but a person familiar with the deal who was not authorized to discuss it publicly said Google paid $1.03 billion for Waze.

The purchase was at least in part a defensive maneuver for Google, which is locked in a heated battle with Apple, Facebook, Microsoft Corp. and other technology giants for the hearts and minds of users connecting to their services from their desktop computers or mobile devices.

The deal was crucial to "protecting the moat" around Google's cash-cow search advertising business, said analyst Brian Wieser of consulting firm Pivotal Research Group.

"Spending money to get Waze out of someone else's hands is invariably a good thing for Google," Wieser said. "It's hard to say to what degree Waze will help generate revenues, but undoubtedly it helps Google avoid the losses or risks of allowing Waze to fall into someone else's hands."

Competition on mobile devices has never been more heated.

Apple, which is working to become less reliant on Google services and replaced Google Maps with its own less well-received mapping service, said Monday that Microsoft's Bing would supplant Google as the default source for searches spoken to the Siri voice assistant for iPhone and iPad.

"The importance of proactively moving forward on mobile is also brought into sharp focus" by Apple's switch, said analyst Ben Schachter of research firm Macquarie Securities.

"The competitive environment for mobile search and mobile services continues to intensify, and continued innovation is of critical importance to maintain usage and engagement," Schachter said.

Google still is the default Internet search engine in the Safari Web browser built into the iPhone and iPad.

The Waze purchase did not trigger automatic government scrutiny because Waze revenue was not significant enough. Government regulators could still review the effect the deal will have on competition in the mapping market.

Even though it's a crowd-sourcing favorite, Waze had struggled to figure out how to make money from its popularity and had reached the proverbial fork in the road: It had to either raise another round of venture funding or sell itself.

"We evaluated many options and believe Google is the best partner," Waze Chief Executive Noam Bardin said in a blog post.

At a technology conference in April, Bardin said his service was "the only reasonable competition" to Google in mobile maps.

Google's purchase of Waze is seen as a boon for Israel, where technology is the main driver of the economy. The sale ranks among the largest in the country's history.

Prime Minister Benjamin Netanyahu called Bardin to congratulate him, saying: "You have put Israeli technology on the world map."

Industry, Trade and Labor Minister Naftali Bennett, himself a former high-tech entrepreneur who reportedly turned down an offer to run Waze several years ago, also saluted Waze's decision to keep the company in Israel.

Israelis generally applauded Waze in social media when it became public that previous negotiations with Facebook and Apple fell apart over the company's insistence on remaining in Israel.

Batsheva Sobelman, a news assistant in The Times' Jerusalem bureau, contributed to this report.

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