There you have it: Following months of rumors about who would acquire Waze, the Israeli-based traffic data start-up, Google (NASDAQ:GOOGL) has emerged the winner.
First, rumors swirled that Apple (NASDAQ:AAPL) was looking to acquire the company, which also happens to be one of the data partners to its controversial Maps app. Apple had already acquired three small mapping companies over the years to put together its service, so adding another one into the mix made some sense at the time.
The speculation turned out to be exactly that. At the All Things Digital conference last month, Kara Swisher bluntly asked CEO Tim Cook if Apple had made a bid for Waze. Apple has been on an acquisition spree recently, but Waze was never in the running, according to Cook.
The market then turned its attention to Facebook (NASDAQ:FB), as the social network has no in-house mapping service and probably needs one if it hopes to compete meaningfully in local e-commerce. Facebook promptly hired the mapping manager that Apple fired, so mapping is certainly on its radar. As part of negotiations, Facebook had wanted Waze's team to move to its California headquarters, but Waze preferred to stay put in Israel. That's fine with Google, as Waze will stay in Israel and operate separately for the time being.
Google has now concluded the episode with a decisive acquisition, which may bolster its mapping lead over its rivals. Google Maps is already the undisputed mapping leader, and integrating smarter traffic data will further strengthen the search giant's position. Google just redesigned its web-based Maps platform last month.
Since Waze's service is crowd-sourced, it inherently benefits from network effects. Tapping into Google's vast user base that far exceeds the 47 million that Waze has will only make the service that much better. It's also possible that once Waze satisfies its contractual obligations with Apple, Google could preclude the Mac maker from accessing the data.
Big G hasn't confirmed how much it's paying, but the total could reach up to $1 billion. Will it be worth it?
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple, Facebook, and Google. The Motley Fool owns shares of Apple, Facebook, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.