Facebook To Buy Mapping Firm Waze For $1 Billion – Reports

Max 'Beast from the East' Smolaks covers open source, public sector, startups and technology of the future at TechWeekEurope. If you find him looking lost on the streets of London, feed him coffee and sugar.

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Facebook is said to be buying navigation start-up Waze, previously courted by Apple

Several reports in Israeli media have claimed that Facebook is looking to buy Waze, the urban navigation and mapping start-up familiar to countless drivers around the world. According to Kalkalist, the price of the deal is in the range of $800 million to $1 billion, and the social network is already in the middle of conducting ‘due diligence’.

By July 2012, Waze had reached 20 million users, and there is indication that this number has already doubled. The software had won the Best Overall Mobile App award at the 2013 Mobile World Congress, beating serious competition.

The deal could add new weapons to Facebook ‘s arsenal, to be used in the fight for hearts and minds of mobile users. In January it was reported that Apple was in talks to acquire Waze for “nearly half a billion dollars” to improve its own Maps service, however no deal was agreed.

“Outsmarting traffic”

Waze for Android and iOS is a free app that learns from users’ driving times to optimise routing and provide real-time traffic updates. It relies on crowdsourcing for map data and other information – users can report accidents, traffic jams, speed traps, police presence and update roads and landmarks. Waze can also help find the cheapest, closest gas station or a parking space.

So far, the company has not generated too much revenue, but just like Facebook, it plans to monetize through location based advertising.

Waze_3.5_ScreenApparently serious negotiations between the two parties began late last year, and this wouldn’t be the first time Facebook went to Israel to do some shopping. In 2011, it acquired local start-up Snaptu, which optimised applications for mobile phones that lacked the processing power and functionality of smartphones. And in 2012, it bought Face.com, whose face recognition technology later caused the social network quite a bit of trouble in Europe.

It is worth remembering another recent acquisition, Instagram, which was originally valued at $1 billion but was later dropped to $750 million. Even though the price range is similar to that of a possible Waze deal, Facebook bought Instagram while still a private company. Now, when it is public, investors will be closely monitoring the return on such large investments. After all, a billion dollars is more than 10 percent of the company’s current cash balance.

Facebook’s recent efforts to attract mobile users include the release of Facebook Home, the app that effectively acts as a homescreen for Android smartphones, offering instant content and chat options without the need to open a dedicated application. However, many users complained that Home made it difficult to use the phone for any purpose other than interacting on Facebook.

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