Google Scores in Mobile With Acquisition of Waze

Michael Teague  |

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Google (GOOG) may have won another battle in the war for mobile advertising dollars with reports that the tech giant will indeed be acquiring the mapping software-maker Waze.
The $1.1 billion dollar deal will bolster Google’s mapping application with Waze’s “social mapping” software that uses GPS data from cell phones as well as real-time updates from users to provide the most up-to-date information on traffic and road conditions.
Rumors of the deal began circulating last week and came as something of a surprise given that the world’s leading social media site Facebook (FB) had been near sealing a deal to purchase the Israeli startup only a couple weeks prior for $800 million.
Mobile advertising has quickly become the arena for fierce competition between tech companies, with Google projected to rake in over half of all spending in 2013. Facebook, who only started making money from advertising in early 2012, has steadily been gaining ground, currently in second place.
Facebook’s stock received a nice bump from its first quarter earnings report that showed substantial gains in the mobile arena, and has been tinkering with a variety of ways to enhance mobile ad earnings. Recently, the company announced an ambitious and somewhat unconventional plan to match the data it has on users of its website to their real-time purchase data. On the other hand, Facebook’s gambit to launch its own phone through HTC, along with its Android-based smart phone software Home, have fallen flat. Recently, the phone’s price was reduced from $99 to $0.99 on poor sales.
Furthermore, there was some perplexity regarding Facebook’s plans for Waze. The company does not have the popular and well-established mapping software that Google does, and the move could have been more an attempt to put up a barrier against competition rather than developing the product. Facebook has made a large number of purchases over the last year, most of which have to do with mobile.
Waze fits neatly into Google’s world, however, and could definitely help the company retain its dominance in the mobile sphere. Last year, the company lost a potentially huge rival in mapping software, when Apple (AAPL) replaced Google Maps with its own mapping program that turned out to be far inferior. With mapping software among the least of Apple’s worries at the moment, Google has had almost a year without what could have been significant competition.
With the acquisition, Google also gains direct access to Waze’s 40 million mobile users. An official announcement about the deal could come as early as Monday.

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