Jun 11, 2013

Why did Google spend a billion dollars on Waze?

Google Maps is already great, and it already shows users the traffic conditions through use of different colors for routes based on congestion/delays. Yet, they spent $1.1 BILLION dollars to purchase Waze (an Israeli mapping company). Sure, a billion bucks doesn't mean the same thing to Google as it does to me, but I’d think even to them it is a tidy sum. What could Waze possibly have to offer Google that justifies the cost?

Most likely to keep Apple, Facebook and Microsoft away from Waze. It certainly wouldn't be the first time such a thing has happened in the technology world, and it won't be the last.

Haydn Shaughnessy, a contributor to Forbes, writes that the acquisition of Waze has implications beyond Google's business strategy:


"With the Waze purchase, Google has given a major endorsement to crowd investors and the risks they’ve  taken on this new model of business. 


"Google has moved crowd center stage and increased significantly  the value of major exits in the  crowdsourcing space."






One very important thing this does is prevent anyone else from purchasing Waze. Google probably saw the potential for Waze to turn into a viable competitor for Google Maps if a company with the resources and inclination to make it happen acquired them instead. Such as Apple, for instance, or perhaps Microsoft.


Beyond that, Google has made a concerted push into social media as we’ve seen with Google+ being tied to practically all Google services. Waze brings experience extending social media to mapping with its model of persistent and real-time crowd sourced data. 

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