If you watch tech news, you might have seen Google’s recent purchase of the Israeli company Waze. You might never have heard of them before, and wonder why Google decided they fetch the astounding price of a full billion dollars.
What is Waze?
Waze is an incredibly popular app for iOS and Android smartphones and tablets. The app is a constantly up to date maps app complete with accurate traffic information, accident and construction statistics and directions. Waze has been immensely successful and gathered over 50 million users, which they leverage to increase the power of their app.
Waze works by crowd-sourcing traffic updates. Anyone with Waze installed on their phone can use it as a driver, allowing them access to turn by turn navigation akin to a GPS, accurate traffic information, notes about construction or accident delays and anything else that could be useful on a trip. The bonus is that Waze users can also update that information. If they come across a 15-minute delay caused by an accident, they can upload that information and inform other Waze users. If another user takes the same route an hour later and finds it all cleared, they can update the note to say as much.
As Waze grows in users, it gains access to a larger field of information with a higher degree of accuracy. This in turn feeds back to a higher quality app that attracts more users.
Google’s Interest and the Map Wars
Google is one of the predominant map providers online. The streetview cars have been steadily mapping the world at a ground-level view for years. Apple and Microsoft both strive to beat out Google in the map wars, so each of them are always looking for an edge.
Google is obviously interested in acquiring Waze. Adding a popular crowd-sourced app with up to date information is a huge boon. After all, the map wars are won or lost by the volume, quality and accuracy of the information provided. Google stands to gain an impossible to beat lead with an app that benefits from having more users. It’s no wonder that Google was willing to outbid Facebook and Apple.
The Power of Local Advertising
Google sees more than just a mapping opportunity with Waze. Waze users expect up to the minute information about the traffic situation around them. Google can help provide that information, but it can take it one step further. Google is, among many other things, a powerful advertising company. They can bring together their vast stores of advertising information, targeted locally, to a pinpoint precision.
Imagine driving to a new city for the first time. You’ll be able to use Waze to pick out the best route, knowing for sure how to avoid the congested rush-hour traffic downtown. You’ll know ahead of time about the accident at the corner ahead and can easily take a detour. With Google, you’ll also be able to ask for dinner information — what restaurants are nearby, what their hours are, what their reviews look like — or any other industry you’re researching.
Google sees the acquisition of Waze as a step towards a massive content providing network that is fueled by user input and runs on Google networks and ad revenue. They stand to gain massive profit and network control over the map industry with this purchase.