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Will Google’s Expected $1.3 Billion Waze Acquisition Be Allowed?

Greg Sterling on June 10, 2013 at 10:48 am

Waze Early yesterday, Israeli business website Globes.co.il said that Google will acquire social mapping app Waze for $1.3 billion. That report has subsequently been all-but-confirmed by others, including the Wall Street Journal (WSJ), which said the announcement could come this week.

The WSJ said that by size Waze would constitute Google’s fourth largest acquisition, assuming it comes to pass.

I argued yesterday on my personal blog Screenwerk that among the range of parties interested in Waze Google needed it least. (Facebook and Apple would benefit far more from it.) Part of Google’s motivation thus appears to be to keep Waze and its social mapping community out of the hands of rivals.

In the benefits column, Google could potentially improve the accuracy of some of its own maps through Waze crowdsourcing. Waze will also get an immediate stream of local-mobile advertising, and Google will get another mobile distribution point for those ads.

AllThingsD says that Google will maintain Waze as an independent entity for the time being. That makes sense because if Google were to shut down Waze or otherwise fold it into Google Maps, the asset would quickly evaporate. Google would then have effectively spent $1.3 billion for a group of Israeli engineers.

Facebook was very close to a $1 billion deal to buy Waze a couple of weeks ago. Talks allegedly broke down over the former not being willing to allow Waze to maintain its employees in Israel. That can’t be the whole story. It doesn’t seem like a “very big deal” to maintain an office in Israel, which Facebook currently doesn’t have and which could otherwise have been an asset given Israel’s thriving startup and development scene.

Now, Waze will go to Google.

Forbes quickly raised the question about whether the transaction would be permitted by regulators. It’s a reasonable question. Waze is a Google Maps competitor, and the acquisition would end that competition.

Waze reportedly has 50 million users globally. As a practical matter, it’s not a major competitor to Google Maps. We’ll never know whether it could have become one had it remained independent. (Waze would have been exciting as a Yahoo acquisition.)

US regulators will probably not try and block the acquisition. Europeans, however, could prove to be more of an obstacle. Google is in the midst of trying to resolve potential antitrust claims in Europe, and this acquisition would complicate that process somewhat.

I suspect in the end, however, the Europeans won’t be a roadblock either.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.