Putting an end to several months of speculation, Google on Tuesday announced that it is buying online mapping service Waze in a $1.03 billion deal. The deal will help the search engine gain a technology that could improve the accuracy and usefulness of its own popular navigation system.
Waze flirted with many potential buyers interested in its rapidly growing service. Waze blends elements of a social network into its maps to produce more precise directions and more reliable information about local traffic conditions.
"We evaluated many options and believe Google is the best partner," Waze CEO Noam Bardin wrote in a Tuesday blog post.
According to The Associated Press, financial terms of the deal weren't disclosed, but a person familiar with the negotiations confirmed the sale price. The person, who spoke on condition of anonymity, was not authorised to discuss the matter. Google isn't expected to disclose the price until it discusses the transaction in a formal regulatory filing.
Waze ranks as the fourth most expensive acquisition among the more than 240 deals that Google has completed in its nearly 15-year history. 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 price underscores the increasing importance of digital maps as people frequently check navigation services on their smartphones and tablet computers to help steer them in the right direction. The reliance on mobile maps creates more opportunities to show money-making ads, particularly those from local merchants. Google can also link the navigation systems to other applications to help generate more revenue.
Google is the leader in the field, but both Apple and Facebook would like a bigger piece of the market.
Google said in a blog post that the Waze deal had already closed. The deal didn't require government approval before it could be completed because of Waze's relatively small size. Although Waze doesn't disclose revenue, it only has about 100 employees.
But Waze has been gaining a foothold in the digital mapping market. Waze says nearly 50 million drivers in 190 countries use its mapping app to avoid traffic jams and find the fastest way to their jobs and other destinations. The service figures out the most efficient routes by drawing upon real-time information shared by about 70,000 members who help edit the maps and even provide other helpful tips, such as where to find the best gasoline prices.
Even though Google already has assumed ownership of Waze, government regulators could still review the deal to assess its effects on the mapping market.
None of Google's previous acquisitions have been blocked by regulators, although a few underwent reviews that lasted nine to 12 months.
Most of the previous regulatory inquiries have centered on Google's dominance in Internet search - a service closely linked to maps - and online advertising.
For now, Google will allow Waze to operate independently and maintain its main offices in Israel. Google, which is based in Mountain View, Calif., is taking the same tack with Motorola Mobility, which operates autonomously in Illinois.
Waze, which started five years ago, is the latest mobile startup to blossom into a billion-dollar baby. Last month, Yahoo Inc. agreed to buy Tumblr, a blogging service started in 2008, for $1.1 billion.
The acquisition also could help Israel's efforts to stamp the country as a wellspring of innovation.
With AP inputs