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Google buying Waze map service for $1.03 billion

Acquiring Waze keeps the service out of the hands of Facebook and Apple, Google’s two fiercest rivals.

Nir Elias/Reuters

Acquiring Waze keeps the service out of the hands of Facebook and Apple, Google’s two fiercest rivals.

SAN FRANCISCO — Google is buying the online mapping service Waze in a $1.03 billion deal that keeps a potentially valuable tool away from its rivals while allowing it to gain technology that could improve the accuracy and usefulness of its own navigation system.

The acquisition, announced Tuesday, ends several months of speculation as Waze flirted with potential buyers interested in its rapidly growing service. Waze blends elements of a social network into its maps to produce more precise directions and more reliable information about traffic conditions.

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Google Inc. is believed to have trumped two fierce foes, Facebook Inc. and Apple Inc., in the bidding for Waze, which is based in Israel but maintains a Palo Alto, Calif., office.

Financial terms were not disclosed, but the Associated Press confirmed the sale price with a person familiar with the negotiations.

Waze is the fourth-most-expensive acquisition among the more than 240 deals Google has completed in its nearly 15-year history. The only bigger purchases were Motorola Mobility Holdings for $12.4 billion last year, DoubleClick for $3.2 billion in 2008, and YouTube for $1.76 billion in 2006.

The price underscores the increasing importance of digital maps as people use navigation services on their smartphones and tablet computers. The reliance on mobile maps creates more opportunities to show money-making ads, particularly from local merchants. Google can also link the navigation systems to other applications to help generate revenue.

Forrester Research analyst Julie Ask expects maps to become a main gateway on mobile devices, much like Internet search engines have been on personal computers. ‘‘A growing percentage of time will be spent discovering, accessing, and engaging content within maps,’’ Ask predicted.

Google is the leader, but Apple and Facebook want a bigger piece of the market.

Those ambitions are probably a key reason Google scooped up Waze, said University of Notre Dame management professor Brian Proffitt, who specializes in technology issues. ‘‘If Facebook had gotten Waze, they’d clearly do something in the mobile market with it,’’ Proffitt said. ‘‘Getting Waze is like a billion-dollar remedy to a potential headache for Google.’’

Waze doesn’t disclose revenue. It has about 100 employees. But Waze has been gaining a foothold in digital mapping. Waze says nearly 50 million drivers in 190 countries use its mapping app to avoid traffic jams and find the fastest way to their destinations. The service figures out the most efficient routes by drawing upon real-time information shared by about 70,000 members who help edit the maps and provide tips, such as where to find the best gasoline prices.

Even though Google has assumed ownership of Waze, regulators could still review the deal to assess its effects on the mapping market. None of Google’s acquisitions have been blocked by regulators, although a few underwent reviews that lasted nine to 12 months.

Most of the inquiries have centered on Google’s dominance in Internet search — a service closely linked to maps — and online advertising.

Waze’s sharing tools could also help Google improve its two-year-old social networking service, called Plus, as it tries to lure traffic from Facebook.

Waze chief executive Noam Bardin said the company decided it made more sense to tap into Google’s vast resources than to stay on its own and eventually face the distractions of an initial public offering of stock.

‘‘Choosing the path of an IPO often shifts attention to bankers, lawyers, and the happiness of Wall Street, and we decided we’d rather spend our time with you, the Waze community,’’ Bardin blogged.

Waze, which started five years ago, is the latest mobile startup to blossom into a billion-dollar baby. Last month, Yahoo Inc. agreed to buy Tumblr, a blogging service started in 2008, for $1.1 billion.

The acquisition also could help Israel’s efforts to stamp the country as a wellspring of innovation.

Faced with limited natural resources, Israel has excelled in technology and fostered a vibrant high-tech culture. The country is a popular destination for global venture capital funds seeking to capitalize on Israel’s entrepreneurial spirit, as well as Israeli expertise honed in universities and advanced technology units of the Israeli army.

Technology is now viewed as Israel’s main economic engine, accounting for roughly half the country’s exports. Israel is even promoting itself as ‘‘startup nation.’’

The Waze buyout ranks among the largest company sales in Israeli history.

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