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Google Buys Waze

As a company built largely on the latent labor in Web links, Google sees value in contributed traffic reporting.

It's official: Google has acquired Waze, maker of the Waze social navigation app.

Brian McClendon, Google VP of geographic products, said in a blog post that Google had concluded the acquisition. The company declined to disclose how much it is paying, but reports suggest a $1.3 billion price tag.

The Waze app works by periodically transmitting data about the user's location back to the company's servers, allowing the company to compute and distribute real-time traffic data. It also encourages users to submit reports about road conditions for the benefit of the community (not to mention the company). That's the social aspect of the app: the savvy use of free labor, something Google harnessed profitably in its PageRank algorithm.

[ Read about eight of the most interesting products and features from Apple's Worldwide Developer Conference. See 8 Apple Changes That Matter. ]

By coincidence or design, Google's announcement comes amid Apple's Worldwide Developer Conference. Apple, having stumbled last year with the launch of a Google-free version of its iOS Map app, was reportedly interested in acquiring Waze as part of its effort to improve its map services. Facebook was said to have been interested as well.

Tony Cripps, principal analyst at Ovum, in an emailed statement characterized the deal as both an offensive and defensive move. "Acquiring Waze is further evidence that the company feels the need to deepen its mapping and location services functionality still further, and Waze's functionality would certainly help it achieve that, as it would have Google's rivals," he said.

Cripps also sees Google benefiting from Waze's popularity among iOS users. Google may be able to leverage this to enhance its Google+ social strategy, he suggests.

In a blog post of his own, Waze CEO Noam Bardin offered reassurance that nothing will be changing for Waze, a constant concern among users of services that get absorbed into other companies. "We will maintain our community, brand, service and organization -- the community hierarchy, responsibilities and processes will remain the same," he said. "The same Waze people will continue to collaborate with you, and we will continue to innovate our product and services, making them more social, functional and helpful for everyday drivers."

Yet Bardin clearly sees the need for a change of business structure to continue growing his company. An IPO, he says, tends to change a company's focus away from customers and toward bankers. So Waze has elected to go Google.

"We evaluated many options and believe Google is the best partner for Waze, our map editors, area managers, champs and nearly 50 million Wazers globally," he said.

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