Google buys Waze (real-time traffic)

Companies in Relationship

Google, Waze

Deal Facts

Initial Announcement Date: 6/13

Consideration: $969M cash + retention bonuses; (Sources: Google 10-K & Google interviews); $841M attributed to goodwill; Google also assumed $69M in liabilities

Google purchases Waze, an Israeli crowd-sourced mapping and navigation company, for $966 million in cash. (Retention bonuses may increase this amount as Waze has confirmed that 100 employees stand to receive $120 million from the deal to be earned over four years after closing.) Google will use the technology to enhance its Google Maps service with Waze's real-time traffic.

Waze has raised $67 million through three rounds of financing. Investors include Kleiner Perkins Caufield and Byers, Horizons Ventures, Magma Venture Partners, BlueRun Venture Capital and Vertex Venture Capital.

A key term of the acquisition included the ability of Waze to continue to operate independently for a period of three years and that employees were not required to relocate from Israel.

Strategic Implications

Waze’s scale not only extends the reach of Google Maps but it also adds another dimension of consumer engagement. Waze’s mission of “contributing to the common good out there on the road” has empowered its users to interact and provide the content beneficial to other drivers.

Apple and Facebook had also bid on Waze, hence Google's acquisition of the company provides strategic defense against these competititors.

Consider the possible long-term strategic implications of the Waze transaction in Google’s self-driving car initiative. Imagine a fully-integrated offering in which you request a car via a smartphone, a self-driven car arrives and is then navigated to the end location utilizing Google Maps powered by Waze technology. Although futuristic, the pieces are starting for Google to create a seamlessly integrated pick-up and delivery mechanism that doesn’t even require a person to take out a wallet or keychain.

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