Will Waze Be Facebook’s Next Instagram?
As has been widely reported and according to sources we have confirmed it with, Facebook is indeed in serious talks to buy Waze for $1 billion, the social traffic application that helps drivers navigate the road with crowdsourced traffic information.
While no deal has been struck as yet, these sources said, the discussions are advanced and closely resemble the social networking giant’s lightning-fast purchase of Instagram a year ago.
The similarities do not stop there. The price is the same and is a mix of cash and stock, said sources. In addition, as Facebook has done with Instagram, Waze will be allowed to operate relatively independently within the company if the deal is struck.
Facebook CEO Mark Zuckerberg recently praised the purchase of Instagram, which has grown to more than 100 million active users in a short time span. More importantly, it has been a critical perceptual part of Facebook’s effort to distinguish itself in the mobile space and has added a highly engaged audience to its audience.
The news of the Waze acquisition interest by Facebook was first reported by Israel’s Calcalist. The Israeli-based company has been the subject of numerous rumors of acquisition, including by Apple and Google, neither of which seems to have panned out.
Not so here and the main question now: Why would Facebook buy a mapping company?
It’s not that much of a surprise, actually. The digital industry has moved its focus to mobile over the past few years, as users are increasingly accessing sites through their smartphones instead of desktop sites. As of Facebook’s last earnings, more than 750 million people visit Facebook via mobile device on a monthly basis.
After intense investor worry over its lack of mobile strategy caused a huge drop in its stock, Facebook quickly shifted to the idea that it needed to own the mobile experience. First, as has been reported by AllThingsD.com previously, that was going to be a proper phone. Then, abandoning that effort, the company mulled creating its own operating system. Finally, it settled on Home, essentially a Facebook-ified version of the Google Android mobile operating system that can be downloaded to run on many Android-enabled phones.
Clearly, Facebook has wanted to own the mobile experience without doing the intense work and uphill fighting of creating its own hardware or building an operating system from the ground up, both of which would struggle for marketshare, just like RIM’s BlackBerry or Microsoft’s Windows Phone.
But as we’ve seen with Google and, most recently, with Apple’s iPhone, if you want to truly own a mobile operating system, you’ve got to own the maps.
Why? Well, it’s an endless treasure trove of continuously updated data directly from your users, including their locations, their habits, their preferred businesses and their travel destinations. It’s why Apple snipped off Google Maps and switched its users over to its own mapping product, despite some problems with its software. And it’s why Google spent the past decade building up its maps to lead the industry.
To avoid getting left out, Waze, in particular, makes a certain amount of sense for a Facebook buy. For years, Facebook has yammered on and on about “social from the ground up” — you can’t just build apps and services and then slap a social layer on top and then just call them social. The network, Facebook argues, doesn’t work like that.
Waze is a perfect example of social from the ground up. From the beginning, the app has relied on not only the passive input of traffic and location data from its users, but the active contribution of data like accidents, police traps and more.
In other words, Waze is based on social contributions for the greater good of others using the app. Talk about something Facebook would be into, even at the high cost of one billion dollars.
But that’s something the company is used to pulling the trigger on. It outbid Twitter for Instagram almost one year ago, in a deal that was closed over the course of a weekend. While Zuckerberg had spent a lot of time creating a relationship with its co-founder Kevin Systrom, in that instance he showed the inclination and the power to grab for what he wants and very quickly.
Facebook declined to comment, with a spokesperson saying: “We don’t comment on rumors and speculation.”