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The Driving Forces Behind Google’s Waze Acquisition

by Nitesh Patel | Jun 14, 2013

Why has Google acquired crowd-sourced map and navigation provider Waze and why has it paid the large sum of $1.3 Billion for a company? Waze’s initial proposition was built on providing free voice-guided navigation to users in exchange for anonymously tracking users’ journeys, while drivers use the application for trip guidance. Tracking drivers’ journeys provides Waze with valuable information, which is used to create more detailed maps and real-time route guidance. For example, monitoring journeys allows Waze to identify one-way roads, see where new roads have been build, collect average traffic speeds to identify disruptions and provide dynamic re-routing, and to identify where traffic signals are likely to be. Waze also encourages drivers to report traffic incidents on their routes, in order to alert other Waze community members of potential journey difficulties. As such Waze has become a serious social tool for drivers obsessed with avoiding traffic. Users of Waze can also able to contribute to map editing through its community dashboard.

What has been surprising has been the ability of Waze to grow its user base, despite the integration of free map and navigation application by OEMs like Nokia’s HERE, Google’s Drive and more recently Apple’s Map service. Waze reported over 47 million users, but as always it’s likely that many were registered but inactive users, rather than drivers actively using the application.

With Google’s large base of Android users, high use of its Google Map and Drive service, Google has access to a large volume of traffic probe data already. So why has Google spent so much to acquire Waze?  Is it because Google gains access to a community of users that are clearly obsessed with traffic and that have bought into the concept of sharing traffic and route information for the greater good? Does Waze possess technology assets to enhance Google’s dynamic routing capabilities? In reality it’s probably a combination of these factors, but more strongly influenced by reports that Facebook (which is becoming one of Google’s main rival for digital advertising spend) was looking to acquire Waze for around $1 Billion in May 2013. So, interest from Facebook, combined with a shortage of alternative targets (that have achieved similar scale) are the two driving forces behind the acquisition.

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