Deep inside Waze, the hot new target of Facebook and Google's affection

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TEL AVIV—First it was Facebook, then Apple, then Facebook again, and now Google. It seems every major tech company wants a piece of Waze, the popular crowdsourcing mapping and navigation service.

Google may enter a bidding war for Waze against archrival Facebook, with the buy-in starting around $1 billion, according to a Friday Bloomberg report. If Facebook were to win, it would be the second time in about a year that the company has shelled out exorbitant coin for an acquisition, after picking up Instagram in mid-2012 for $1 billion.

When reports surfaced in January that Apple was considering buying Waze—rumors that were later debunked—the supposed acquisition made a lot of sense.  It would have solved Apple’s infamous mapping woes that were so effectively highlighted at the time by iOS users on Tumblr and Reddit.

The reasons for Facebook or Google to acquire Waze, while not as obvious as Apple’s, are still quite sound and strategic. Mobile is a massive component of both companies' growth stories right now, and on mobile platforms location is everything. Location lets you target ads, provide more interesting new services, and of course supply navigation. And Waze has all of these things. Google doesn’t necessarily need what Waze offers, but Waze would give Facebook a serious edge that it now lacks.

Waze: all about community

Waze's beginnings can be traced to 2006 when co-founder Ehud Shabtai kicked off a community-based project in Israel to create a map that would help his fellow drivers avoid costly speeding tickets.

“I got a PDA from my wife and I really liked it,” Shabtai told PCWorld in an interview last summer at the company’s understated development offices in Ra’anana, Israel. “I wanted to start a project tracking all the speed cameras in Tel Aviv.” Shabtai's goal was completed in just two weeks thanks to the contributions of like-minded drivers.

Ehud Shabtai  - Waze
Ehud Shabtai, CTO

Fast forward from that initial taste of crowd-harnessed data to 2013, and Waze has grown from a small part-time project to a venture-funded company co-founded by Shabtai, Amir Shinar, and company President Uri Levine, with business operations run from California by CEO Noam Bardin.

The Waze team helps more than 40 million commuters worldwide steer clear of traffic jams and avoid speed traps on their way to work, as well as direct lost drivers to their destinations. Israeli news site Ynet reported earlier in May that about a third of Waze’s user base was in the U.S., where it plays second fiddle to Google Maps. In developing regions such as Brazil, Uruguay, and Indonesia, however, Waze’s user base is larger than even the mighty Google’s, according to Ynet.

With Waze you won't find any fancy 3D flyovers like in Apple Maps. Nor will you find Google-styled Street View photography, or even the static navigation functionality of TomTom. Waze is a commute-focused mapping experience that helps around 9 million drivers in the United States avoid traffic, improve their daily routes to and from the office, and chat with fellow commuters on the go.

If Waze isn't absorbed by a larger company, the navigation startup faces serious challenges from mobile powerhouses Apple, Google, and Microsoft. All three provide built-in mobile navigation services for iOS, Android, and Windows Phone respectively that could undermine the popularity of Waze's smartphone app, and cut off the start-up's lifeblood: crowdsourced data.

Regardless of what's ahead for Waze, the company has created a popular service that millions rely on to get around town.  If you're unfamiliar with Waze or haven't checked out the service in a while, here's a breakdown of what Waze is and what it does for drivers worldwide.

[RELATED: 21 Awesome GPS and Location-Aware Apps for Android]

What Waze does

The Waze smartphone app for Android and iOS provides a set of maps and helps route you to work, home, and other places of interest based on up-to-the-minute traffic conditions. Waze users, whom the company calls Wazers, allow the app to track their cars' locations and speed to give the service up-to-the minute data on traffic conditions. Wazers can also submit eyeball reports for various problems they encounter on the road, such as accidents, potential hazards, or police speed traps.

The net effect of Waze's crowdsourced information is that you can quickly determine where to expect problems during your morning and evening commutes. If traffic is really bad, Waze can reroute your trip in real time. Waze can supply a lot of useful data, but as with any crowdsourced tool, Waze is most useful when a large volume of users are feeding data to the service. So your mileage may vary depending on how many Waze users are active in your area.

It starts with the map

Waze harvests more than real-time road conditions from its users. The company's maps are also user-made, at least in part. In the U.S., Waze first created a baseline for its service with map data from the U.S. Census.

Waze's navigation screen

Wazers then began the work of improving that baseline cartography by driving down new or uncharted roads, participating in a live Pac-Man-like game in which drivers capture virtual road goodies by driving over them on the map. Each captured road goodie—which are usually video game-like items, such as cherries, hammers, and gift packages—award user points. The more user points, the greater level of trust a user achieves within Waze, including greater editing authority on maps at Points can also make drivers eligible for prizes during company promotions.

Waze's army of user-contributed information and online editing helps keep the service's maps up to date and accurate, and provides more data than Waze's staff of fewer than one hundred people spread across two offices in Israel and California could maintain alone. But why would anyone bother doing all that map work for free for a for-profit company?

"They are working for themselves," Shinar said last summer. "They are mapping places that they need." Creating the best possible map for a commute has value for an individual, Shinar says. Put enough people with similar needs together, and you end up with a community interested in maintaining a network of up-to-date maps.

To convince users to keep using the app, Waze also offers features such as user-reported gas prices at nearby stations, and integration with Facebook, Twitter, and Foursquare. The company also recently launched an ad platform where local businesses can let you know about deals when you’re in the area.

It's all about (your) data

When we spoke with Waze last year, the company had moved beyond providing a free navigation app and selling ads. It was also selling its mapping and traffic information to institutional customers who need large traffic data sets. At the time, Waze was still developing business relationships in the U.S., but the company said it provided statistical data to Israel's Ministry of Transport.

Selling ads, map data, and aggregated traffic information helps keep Waze free to users, but with so many parties interested in Waze's database, how can you be sure your information is safe?


Shabtai and Shinar say they realize how important this information is, and they take user privacy very seriously. "We don't know anything about you specifically," Shabtai said. "We don't know your phone number or any UID [user identification number] of the phone. If you give us your full name we know that, but we only know what you want to tell us."

Waze says it doesn't sell any personal user information, and you can delete your personal data from its servers at any time. Left untouched, your driving logs and other data stay on company servers for an unspecified period of time, something that privacy-conscious users may be uncomfortable with if the acquisition rumors prove true.

But before you delete your Waze data to keep it from the clutches of Facebook or Google, be aware this is not the first rumor of a Waze buyout. In mid-2012, Israel-based business daily Globes reported that Waze was meeting with Facebook executives. The topic of the meeting was unknown, but another Israeli newspaper, Ha'aretz, reported at the time that Facebook may have been offering to acquire Waze for $200 to $300 million. After the Facebook buyout rumors came the Apple acquisition rumors of early 2013, followed by the latest round of Facebook rumors, and now the Google rumors.

And the Waze acquisition speculation may not soon subside. Bloomberg says the company is also mulling whether to take another round of venture funding in order to remain independent.

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