Why Israel's Map App Waze Is Grabbing the Attention of Google and Facebook

Photographer: Paul Sakuma/AP Photo

The potential bidding tussle for Waze Inc., which uses information from online communities to improve driving directions, reflects the widening importance of maps on smartphones and other handheld gadgets. Close

The potential bidding tussle for Waze Inc., which uses information from online... Read More

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Photographer: Paul Sakuma/AP Photo

The potential bidding tussle for Waze Inc., which uses information from online communities to improve driving directions, reflects the widening importance of maps on smartphones and other handheld gadgets.

Waze has come long way from being a hit mobile app in Israel to a global mapping phenomenon that has attracted buyout interest from Facebook and Google. What's fueling the startup's worldwide popularity? Its service seeks to alleviate a universal headache: traffic.

Drivers love the Waze service because it layers additional information on top of standard digital maps, including potentially troublesome road work, collisions and speed traps. Users happily report these street nuisances because Waze turns it into a game, where you get points for contributing information. The added knowledge helps Waze steer its users down the right path based on current conditions.

That, in turn, is what's driving Waze's growth just about everywhere in the world. Of the 47 million people using the company's apps for the iPhone and Android: 11 million are in the U.S.; 10 million are in Europe; 9 million are in Latin America; and 2.5 million are in Asia, according to the company. The numbers suggest that the crowdsourced mapping service can work just about anywhere, and there’s plenty of room for growth. The app is free and covers 193 countries.

Google is considering buying Waze as the startup, now based in Palo Alto, California, seeks a price tag of more than $1 billion, Bloomberg News reported last week. Earlier this month, my colleagues reported that Facebook has been in talks to acquire Waze.

“We’re collecting an enormous amount of data, and we’re analyzing all of it,” Noam Bardin, Waze’s chief executive officer, said in an interview last year. “You hear about big data? This is really big data.”

Bardin and his lieutenants have used some shrewd techniques to break into new territories. For example, Bardin has helped negotiate contracts with map resellers and providers, including Apple, where the companies agreed to exchange information instead of cash. Bardin is a champion of this sort of data bartering, as I reported in Bloomberg Businessweek last year.

For those without a smartphone, a growing number of automakers will be integrating Waze into their GPS systems, Bardin has said. That will help the company reach an even bigger audience. As for generating revenue, Waze began rolling out advertisements to all users of the app in November.

All of this is adding to its attractiveness as a takeover target. Of course, the startup could ultimately decide it wants to go solo. For now, its final destination is unknown.

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