After dates with Apple, it's an engagement with Facebook: Waze selling for $1bn

After dates with Apple, it's an engagement with Facebook: Waze selling for $1bn

Summary: The Israeli crowdsourced navigation and mapping app could become a part of the world's largest social media network.

SHARE:
TOPICS: Apps
12

Months after the rumors that Apple was planning to buy Israeli crowdsourced traffic and navigation app Waze for $400m, the stakes have been raised. According to reports in the Israeli business press on Thursday morning, Facebook is now seeking to buy the company for between $800m and $1bn.

The deal is now in the advanced stages, according to a report in the Israeli business daily Calcalist, with both companies already signing a term sheet and Facebook teams doing due diligence.

There's thought to be one issue holding back a final deal, Calcalist reports: Waze management, including CEO Noam Bardin and president Uri Levine, are insisting on keeping the company's R&D facility in Israel, while Facebook would prefer to integrate it with its existing facilities overseas. That issue could prove a key one, given Facebook's tendency to take the startups in acquires and move them to existing facilities in the UK, Silicon Valley, or New York.

According to a source with knowledge of the negotiations who spoke on condition of anonymity, there is a substantial difference between the Facebook talks and those held when there was a possibility that Apple was going to buy Waze. "You could term the interaction between Waze and Apple as a series of 'dates,' whereas this seems more like an 'engagement.' The deal makes a lot of sense for Facebook, and of course Waze would be getting a lot more money."

It's not clear if the location issue is crucial to the deal, but in previous interviews, Waze's Levine has said that the company is very proud of its Israeli roots, and that he did not foresee moving anywhere.

Waze is chiefly a navigation and mapping app, with routes, traffic information, and up to date mapping data supplied by some 45 million users in countries around the world. All the information is crowdsourced, with users either passively (via GPS and location services) or actively (via the app's social network) supplying information about how fast they are going, whether they are stuck in traffic, road hazards, construction, and even the presence of traffic cops.

changingroute-620x930

As a result, Waze has built an active and loyal social network, one that is highly engaged with the app – just the kind of user Facebook craves, said analysts. Waze also has a built in mobile ad platform, and in its latest version supplies Google Maps-like recommendations. "That's a big plus for Facebook, in the ongoing war for interaction with users," and a plus for Waze, which wants to ally with a big company in order to remain relevant, given Google's plans for its Waze-like Navigator app, said local social media expert Yotam Tavor.

"Waze has the platform, the ad system, and the loyal users. All Facebook would have to do is brand it, Tavor added. What's more, Waze's latest version allows users to sign up for the service using their Facebook credentials.

The deal could also help Facebook with its ongoing struggle to establish itself in the local ads market. "Waze's geolocation technology will give Facebook a strong advantage, with the ability to advertise local shops, restaurants, and services to drivers. Waze itself already does this, but on a limited scale, so there, too, Facebook could simply integrate it into its own platform from Day One."

According to the report, Facebook would pay half the amount agreed on in cash, and the rest in company stock. If Facebook buys Waze, it would be the company's third acquisition in Israel. Facebook bought mobile application platform Snaptu in 2011 for $70m, and face recognition technology maker Face.com in 2012 for $60m.

If the pricetag for Waze is as rumored, it would make for a fantastic payoff for investors. The company has raised $67m in three financing rounds so far, most recently in October 2011.

Topic: Apps

David Shamah

About David Shamah

David Shamah has been writing about Israeli technology news for over a decade, both in print and on the web, and knows the Israeli tech scene and its start-ups inside out.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

12 comments
Log in or register to join the discussion
  • Tried this

    it's a pos. just more FB waste
    happyharry_z
    • I would not go as far as POS but still.

      There are some cool aspects to Waze but the map rendering is simply horrid. Map accuracy is not bad but data completeness is sub-standard. The social aspect is interesting but I wonder about the logic of it for a driving aid.

      In all, I find many aspects interesting but on a whole, it is so-so. I see it fitting in with FB much better than companies like Apple and Goolge, neither that even remotely understand the concept of social.
      Bruizer
      • Well, you can help fix that. Waze is crowd-sourced mapping.

        Well, you could theoretically help fill in the missing roads in your area. Waze isn't a conventional service where they hire people to create the maps: The maps are created by their users, and the completeness of the maps in the area depends highly on how active the Waze community is in your area.

        So the beauty is that if the data completeness is sub-standard, you can actually fix it yourself, rather than complaining to some large nebulous business that will likely take years to get around to fixing your area. At least that's the idea.

        The social aspect I largely ignore. Waze was started when "social" meant "almost guaranteed popularity." They may claim otherwise, but my opinion is that "social" in Waze is more a stunt to make it popular, rather than an actual useful feature. It's actually really dangerous to use the social features while driving.
        CobraA1
        • That will take years.

          But even with complete rendering, the rendering is simply horrid. Some nice things but still long long ways from finished or even Alpha quality.
          Bruizer
          • Stolen from Apple Maps...

            "the rendering is simply horrid. Some nice things but still long long ways from finished or even Alpha quality". Definitely a direct steal of Apple Maps.
            NotMSUser
          • Waze is older than Apple Maps

            Waze is older than Apple Maps. If anything, maybe Apple stole from them.

            Do you have a specific complaint? What don't you like about the rendering?
            CobraA1
          • Umm, it's not one person . . .

            "That will take years."

            Umm, it's not one person, it's pretty much anybody who uses the service, and in many areas it's actually quite comprehensive.

            It's called "crowd sourcing," and it's actually quite effective if "the crowd" buys into the concept.

            Of course, it *does* assume the crowd buys into the concept - and apparently in your area, they don't. Crowd sourcing, like a lot of concepts that are hyped as cure-alls in the tech press, isn't always all it's cracked up to be.

            But - if you can go around your area advertizing and plugging Waze, who knows? Maybe there's a Waze community waiting to be formed.
            CobraA1
        • That's not beauty

          Sure, it's great to be able to correct something yourself, but if you actually need to go somewhere and the data isn't there and (almost by definition, since you're using a map) you don't know the local area then you'd be really inconvenienced.

          The edge cases for bad/missing map data lead to really bad user experiences.

          Acquiring them to overlay the social aspects with reliable map data makes sense. But the social map building features are not work a very much at all.
          mpm123
    • eh?

      Eh? They haven't struck a deal yet. Waze is not part of Facebook. This may end up being rumor, not fact. If they don't work out the R&D location, it may not happen.

      You may not like it, but it's not "FB waste." And it would be helpful if you explained why you didn't like it . . .
      CobraA1
  • After dates with Apple, it's an engagement with Facebook: Waze selling for

    Let's hope they still continue to release the Microsoft Windows Phone 8 version of Waze.
    Loverock-Davidson
    • perhaps

      Microsoft could buy Waze?
      danbi
  • Facebook versus Yahoo

    It makes zero sense actually for a non-platform company like either Facebook or Yahoo to get into local navigation and mapping space. But with the kind of business strategy changes going on at both companies (Yahoo to move into mobile app space since it cannot get into search advertising all by its own and Facebook under post-IPO pressure to perform), it is no surprise that either of these companies wants to do what Microsoft or Apple should be doing.

    Why has not Apple acquired Waze especially since it does not have any market leading mapping assets like Navteq or Bing Maps at Microsoft/Nokia or Google Maps at Google?

    Among Microsoft, Apple, Google, Amazon, Facebook, Yahoo and Twitter, both Yahoo and Apple appear lost on their business paths in the last one year in the Internet/Mobility services market. Microsoft and Google have credible services and especially Google still leads with their stuff. Facebook and Twitter are still upcoming while Amazon is waiting to dazzle.
    calahan