Google buys Waze mapping app

Google Inc. confirmed Tuesday that it has closed the deal to purchase Waze, the Israeli user-sourced traffic and navigation app, ending months of speculation about rival bids for the start-up from Google, Apple and Facebook.

Financial details were notreleased, but the New York Times reportedthat a source familiar with the deal said Googlepaid $1.03billion US for the app.

If that purchase price is accurate, it would makeWaze the fourth most expensive acquisition among the more than 240 deals that Google has completed in its nearly 15-year history, the Associated Press reported. The only bigger purchases are Motorola Mobility Holdings for $12.4 billion last year, DoubleClick for $3.2 billion in 2008 and YouTube for $1.76 billion in 2006.

"The Waze product development team will remain in Israel and operate separately for now," Google said in ablog postTuesday. "Were excited about the prospect of enhancing Google Maps with some of the traffic update features provided by Waze and enhancing Waze with Google's search capabilities."

In its ownblog post, Waze said nothing would change at the company.

"We will maintain our community, brand, service and organization the community hierarchy, responsibilities and processes will remain the same,"CEO Noam Bardin said in the post.

Bardin said Wazeopted to be bought byGoogle rather than launching its own public offering because "an IPO often shifts attention to bankers, lawyers and the happiness of Wall Street, and we decided we'd rather spend our time with you, the Waze community."

Part social network, part GPS

Waze, which reportedly hasclose to 50 millionusers, ispart social network, partGPS. Itallows drivers to share real-time traffic information, such as the location of police radar, toll roads andaccidents; whatroad conditions are like; where the traffic jams are; and which gas stations have the cheapest fuel.

The free mobileapp includes its own maps, whichare edited and updated regularlyby users, and syncs up with Facebook to allow drivers to track which of their friends are also on the road and and to organize meet-ups.

Earlier this year, Waze released data about its performance in 2012. It said 36 million users in 110 countries used the app, clocking close to 10 billion kilometres and submitting a total of 90 million user reports. About 12 per cent of Waze users are in the U.S.

Waze's mapping software, which works on both Apple and Android devices,has been praised by some in the tech industry as being superior to some of the other mapping services out there, such as Mapquest, Google Maps and Apple Maps, whichwas usingWaze data when its own map service was struggling.

Thanks to its reliance on crowdsourcing,Waze isable to update its maps and add new roads in real time. By collecting information on where drivers are, which direction they're travelling in and how fast, it's able to provide precise traffic information and also to sell location-based advertising that directs drivers to particularbusinesses and services.

Microsoft owns 10%

The company wasfounded in 2009 when Israelisoftware engineerEhud Shabtai, who had created anopen-source mapping project called Freemap three years earlier, teamed up withtwo other Israeli entrepreneursand computer specialists.

The company, which is based mainly in Israel but has offices in Palo Alto, Calif., is funded by several venture capital firms, including Magma Venture Partners, Vertex Venture Capital,and Kleiner Perkins, as well aslarge investors like Microsoft , which owns 10 per centof the company. It is reported to have raised at least $67 million in venture capital.

"The really big winners at Waze are those venture capital funds that invested in the company in the past three years,"areportin the Israeli business publicationGlobes said Monday. "If we assume a price tag of $1.1 billion, then those funds recouped 12-13 times their investment."

Forbesreportedearlier this yearthat while Waze had secured advertising from large companies like Taco Bell and At&T, it was still far from being profitable.

Advertisingin the app could get a significant boost were Waze to be integrated into Google's AdSense system of targeted ads although it was unclearMonday whether Googleplanned tofullyabsorb Waze into its own mapping service or keep it as a separate product.

Some speculated that Google's motivation in making the acquisition was to keep Waze out of the hands of rivals that have their own mappingapps thatcould benefit from Waze's data.