Google Inc is considering buying map-software provider Waze Inc, setting up a possible bidding war with Facebook Inc, people familiar with the matter said.
Waze is fielding expressions of interest from multiple parties and is seeking more than US$1 billion, said one of the people, who asked not to be identified because the talks are private. The Palo Alto, California-based startup might also remain independent, instead seeking to raise a round of venture capital financing, the sources said.
As consumers gravitate toward mobile devices away from laptops and desktops, Facebook, Google and other companies are beefing up efforts to court customers on the go. The potential bidding tussle for Waze, which uses information from online communities to improve driving directions, reflects the widening importance of maps on smartphones and other handheld devices.
Facebook has held talks to buy Waze for as much as US$1 billion, two people familiar with the matter said earlier this month.
Google and other large tech companies have approached Waze about a possible deal since the Facebook talks became public, the people said.
None of the bidders is close to clinching a deal and the talks may fall apart, they said. Waze may also walk away from the discussions and use more venture backing to expand its mapping program, which has more than 40 million users.
Google has a widely used mapping tool and could adopt Waze’s technology to add social features to the software.
A takeover would also eliminate a competitive threat and keep the startup out of the hands of another company, according to Greg Sterling, an analyst at Opus Research.
“If they put a lot of effort behind it and really try to develop a social mapping product, it could be something significantly differentiated from what Google is offering and could grow into a competitor for Google Maps,” Sterling said in an interview.
Apple Inc, which distributes a competing mapping tool, is not currently part of the discussions, a person with knowledge of the matter said.
While a Google purchase of Waze might not be blocked by US regulators for its potential to alter the competitive landscape, it could still end up being scrutinized, said Allen Grunes, a former antitrust attorney for the US Department of Justice in Washington.
Incorporating Waze technology into Google Maps may “complement a product they already have and make it better, as opposed to representing a leading product they already compete with,” Grunes said in an interview.
The transaction “could get looked at anyway by regulators because if Google gets it, it’s quite possible Facebook will be in there complaining, even if there isn’t a real antitrust problem.”
Grunes compared the transaction with Facebook’s acquisition of Instagram, which received an extended review by the US Federal Trade Commission before the agency finally approved the deal in August last year.
The Department of Justice, which has examined Google’s acquisitions for the past two years while the US Federal Trade Commission conducted a broad antitrust probe of Google’s business practices in search, would also likely be the agency to look at a Waze purchase, Grunes said.
In the US, Waze’s mapping app attracted 6.3 percent of users on Apple’s iPhone last month, compared with 32 percent for Google’s navigation tool, according to Onavo Inc, which provides user-engagement data on applications for mobile developers.
Waze, a free service, generates revenue via location-based advertising. Its tools are also available over the Web. The company’s spokeswoman Julie Mossler declined to comment on Saturday.