May 24 (Bloomberg) -- Google Inc., maker of the Android
operating system, is considering buying map-software provider
Waze Inc., setting up a possible bidding war with Facebook Inc.,
people familiar with the matter said.
Waze is fielding expressions of interest from multiple
parties and is seeking more than $1 billion, said one of the
people, who asked not to be identified because the talks are
private. The Palo Alto, California-based startup might also
remain independent, instead seeking to raise a round of venture
capital financing, the people said.
As consumers gravitate toward mobile devices away from
laptops and desktops, Facebook, Google and other companies are
beefing up efforts to court customers on the go. The potential
bidding tussle for Waze, which uses information from online
communities to improve driving directions, reflects the widening
importance of maps on smartphones and other handheld gadgets.
Facebook, based in Menlo Park, California, has held talks
to buy Waze for as much as $1 billion, two people familiar with
the matter said earlier this month.
Google, based in Mountain View, California, and other large
tech companies have approached Waze about a possible deal since
the Facebook talks became public, the people said.
None of the bidders is close to clinching a deal and the
talks may fall apart, they said. Waze may also walk away from
the discussions and use more venture backing to expand its
mapping program, which has more than 40 million users.
Google has a widely used mapping tool and could adopt
Waze’s technology to add social features to the software. A
takeover would also eliminate a competitive threat and keep the
startup out of the hands of another company, according to Greg
Sterling, an analyst at Opus Research.
“If they put a lot of effort behind it and really try to
develop a social mapping product, it could be something
significantly differentiated from what Google is offering and
could grow into a competitor for Google Maps,” Sterling said in
Apple Inc., which distributes a competing mapping tool, is
not currently part of the discussions, a person with knowledge
of the matter said.
While a Google purchase of Waze might not be blocked by
U.S. regulators for its potential to alter the competitive
landscape, it could still end up being scrutinized, said Allen
Grunes, a former antitrust attorney for the Justice Department
Incorporating Waze technology into Google Maps may
“complement a product they already have and make it better, as
opposed to representing a leading product they already compete
with,” Grunes said in an interview. The transaction “could get
looked at anyway by regulators because if Google gets it, it’s
quite possible Facebook will be in there complaining, even if
there isn’t a real antitrust problem.”
Grunes compared the transaction with Facebook’s acquisition
of Instagram, which received an extended review by the U.S.
Federal Trade Commission before the agency approved the deal in
The Justice Department, which has examined Google’s
acquisitions for the past two years while the FTC conducted a
broad antitrust probe of Google’s business practices in search,
would also likely be the agency to look at a Waze purchase,
The FTC, which closed its search probe in January without
taking any enforcement action, is now investigating Google’s
practices in online display advertising, people familiar with
the matter told Bloomberg yesterday.
In the U.S., Waze’s mapping app attracted 6.3 percent of
users on Apple Inc.’s iPhone last month, compared with 32
percent for Google’s navigation tool, according to Onavo Inc.,
which provides user-engagement data on applications for mobile
Waze’s investors include Redmond, Washington-based
Microsoft Corp., people said. Waze raised $30 million in 2011 in
a funding round led by Kleiner Perkins Caufield & Byers and Hong
Kong billionaire Li Ka-shing’s Horizons Ventures Hong Kong.
Earlier investors include Qualcomm Ventures, Magma Venture
Partners and Vertex Venture Capital in Israel and BlueRun
Ventures in Silicon Valley.
Julie Mossler, a spokeswoman for Waze, declined to comment
Waze announced a partnership with IMS Internet Media
Services in April to expand in Latin America. Waze’s mobile app
alerts users to potential traffic slowdowns or suggests
alternative ways to reach destinations. The service also
notifies drivers of road work, speed traps other potential
hazards, using input from users.
Waze, a free service, generates revenue via location-based
advertising. Its tools are also available over the Web.
Google’s shares fell 1.1 percent to $873.32 at the close in
New York. The stock has advanced 23 percent this year, compared
with a 16 percent gain for the Standard & Poor’s 500 Index.
To contact the reporters on this story:
Douglas MacMillan in San Francisco at
Brian Womack in San Francisco at
Ari Levy in San Francisco at
To contact the editor responsible for this story:
Tom Giles at