Google Inc. (GOOG:US) has agreed to acquire map-software provider Waze Inc. for about $1.1 billion, a person with knowledge of the deal said, seeking to keep competitors such as Facebook Inc. (FB:US) from eroding its lead in mobile-navigation programs.
The deal for Waze, based in Palo Alto, California, may be announced as early as today, said the person, who asked not to be named because the plans are private.
As consumers shift to smartphones and tablets and away from personal computers, Facebook and Google are increasing efforts to court customers on the move. Waze, whose mobile app solicits input from more than 40 million users to improve directions and display traffic and road-hazard details, would help Google add social features to its mapping tool. It may also help Google extend its dominance in maps over rival Apple Inc.
“Google needs to maintain supremacy in maps, as they are a key to mobile advertising,” Andrew Frank, an analyst at Gartner Inc., said in an e-mail. “They need more ways to shore up their social efforts.”
Waze Chief Executive Officer Noam Bardin didn’t return a call seeking comment. Paul Solomon, a spokesman in Israel for Mountain View, California-based Google, said the company declined to comment.
Google has been discussing a deal with Waze since at least May 23, when Bloomberg News initially reported the talks. The acquisition plan was first reported yesterday by Globes, an Israeli financial daily. Globes listed the price as $1.3 billion.
The deal would let Google, owner of the world’s most popular search engine, eliminate a threat to its home-grown navigation app. It would also keep a growing provider of mapping software away from other companies, including Facebook, the world’s largest social network. Facebook, aiming to bolster its own mobile strategy, offered Waze almost $1 billion last month, two people familiar with the matter said in May.
“The rivalry between Google and Facebook is escalating,” Frank said. “This will be seen as another skirmish in an increasingly aggressive competition, which should ultimately benefit consumers and advertisers.”
Waze’s mobile app, which runs on Apple’s iOS operating system and Google’s Android software, 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. With free tools available over the Web and on mobile devices, Waze generates revenue via location-based advertising.
Waze was started in Israel and later moved its headquarters and some operations to the U.S. The company’s investors include Redmond, Washington-based Microsoft Corp. (MSFT:US), people familiar said last month. 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.
In the U.S., Waze’s mapping app attracted 6.3 percent of users on Apple’s iPhone in April, compared with 32 percent for Google’s navigation tool, according to Onavo Inc., which provides user-engagement data on applications for mobile developers. Waze announced a partnership with IMS Internet Media Services in April to expand in Latin America.
Apple’s own efforts in mobile maps stumbled last year, when the company introduced new software that was faulted for unreliable landmark searches, routes that got users lost and a lack of public-transit directions. Before Apple added its own program, Google’s map application had been built into the iPhone since its introduction in 2007. Google later rolled out a rival downloadable app for Apple’s devices.
A Google purchase of Waze may still be scrutinized by U.S. regulators for its potential to alter the competitive landscape, Allen Grunes, a former antitrust attorney for the Justice Department in Washington, said last month.
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