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You are here: Home / Mobile Apps / Crowdsourcing: Facebook's Next Buy?
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Facebook May Buy Crowdsourced Map Firm Waze for $1B
Facebook May Buy Crowdsourced Map Firm Waze for $1B
By Barry Levine / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
MAY
09
2013


According to reports in the Israeli press, social networking giant Facebook is buying the Israel-based Waze for between $800 million and $1 billion. Waze provides a crowdsourced traffic and navigation app, with tens of millions of users around the globe.

The reports in several Israeli publications said a terms sheet has been signed and due diligence efforts are under way. Several months ago, Apple was reportedly trying to purchase Waze for about $400 million, but that pursuit fizzled out. To date, Waze has raised about $67 million in venture funding.

Waze says it has about 47 million users worldwide, more than twice what it reported last July. About one-third of its users are in the U.S., providing a base of support in the non-U.S. world that Facebook needs to continue its growth rate.

Where R&D?

Some observers have suggested the deal's closing may depend on where Waze's R&D facility will be located post-deal, since Waze's management wants to keep it in that country and Facebook customarily wants to move its purchases to its R&D facilities in the U.S. and the U.K.

Facebook's two previous Israeli acquisitions -- $70 million for phone interface developer Snaptu and $50 million to $60 million for facial recognition provider Face.com -- resulted in those companies moving to Facebook's facilities. Waze's U.S. offices and its CEO, Noam Bardin, are in Palo Alto, Calif.

Waze offers car routes, traffic information and mapping provided by its users, either automatically through location-based services or manually through user input. The information from the field can include speed of traveling on a given route, any impediments to traffic, like construction, or speed traps by law enforcement.

Waze also has an active mobile ad network. Growth possibilities include local ads and recommendations of attractions along a given route. Facebook has been looking to continue the growth of the mobile side of its business, which now has about 750 million monthly active users, an increase of more than 50 percent since the same time last years.

'Hard to Monetize'

Andrew Frank, research director at industry research firm Gartner, said that from an advertisers' point-of-view, the fact that the Waze service is crowdsourced doesn't provide an advantage over, say, canned content services, such as Google Maps.

"Advertisers still think in terms of targeted reach," he said, so the fact that users might have invested some of their time in providing information to the app means less to the advertiser than reaching a given audience segment.

Current Analysis' Avi Greengart questioned whether the navigation or mapping aspect of the purchase was that important to Facebook. It's "not clear Facebook needs to own maps applications," he said, unless it is planning to start its own mobile operating system.

Greengart noted that, depending on the mobile device, users can access map and navigation services from Google, Nokia, Apple or others, plus mapping services are "expensive to maintain, and hard to monetize."

He suggested that, in addition to the user base, Facebook might be interested in the technology. There are "all kinds of interesting things you can do with crowdsourcing if you're a social network," he pointed out.

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