Is Facebook Inc (NASDAQ:FB) looking to add its own digital mapping service to the largest social network in the world? Recent reports that the company could pay up to $1 billion for crowdsourced Israeli mapping company Waze appear to confirm that Facebook plans to roll out its own maps service to rival Google Inc (NASDAQ:GOOG), and to reduce its dependence on maps from Microsoft Corporation (NASDAQ:MSFT) Bing.
If the deal goes through, and Facebook Inc (NASDAQ:FB) acquires Waze’s 47 million global users, then a huge paradigm shift that affects Google Inc (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), Microsoft and Yelp Inc (NYSE:YELP) could soon occur.
What is Waze?
Although Waze has 47 million registered users, Swedish market research firm Berg Insight claims that it only has 12 million to 13 million active monthly users. By comparison, Google Maps has 30 million active users, Telenav Inc (NASDAQ:TNAV) (which powers a large percentage of GPS devices) has 25 million, while Apple Inc. (NASDAQ:AAPL) Maps has approximately 5 million. Waze was originally conceived as a simple way for drivers to share road conditions with each other via their smartphones.
Waze operates very differently from other mobile navigation apps, which draw data from Google Maps or Nokia Corporation (ADR) (NYSE:NOK)’s Navteq Maps, since it uses its own maps compiled from crowdsourced data. Each Waze user helps collect traffic and road data which is sent back to the company to dynamically improve its maps. In addition to traffic data, Waze users contribute other information, such as where to buy the cheapest gasoline. Waze also provides turn-by-turn navigation for mobile users.
What Waze means for Facebook
Waze and Facebook Inc (NASDAQ:FB) already have an existing partnership, signed last October, that allows Waze users to share their driving routes with Facebook friends. While Waze initially seems like an odd fit for a social network that generally relies on social connections and local business check-ins, there is much more at stake.
First and foremost, acquiring Waze would grant Facebook Inc (NASDAQ:FB) independence from Microsoft Corporation (NASDAQ:MSFT)’s Bing Maps, which are powered by Nokia Corporation (ADR) (NYSE:NOK)’s Navteq technology. Bing Maps are nowhere near as popular as Google Maps. Facebook users who weren’t satisfied with Bing Maps went so far as to develop special apps, such as Facebook Panda, to replace Bing Maps with Google Maps.
Facebook Inc (NASDAQ:FB) could also smoothly integrate its “Nearby” check-ins and ratings system into Waze maps. Therefore, Waze would not only offer directions and gas prices, but also ratings of nearby restaurants and entertainment venues favored by your friends. By doing so, Facebook could horizontally integrate itself with Waze’s crowdsourced database, since Facebook is built upon a business model in which its users do all the heavy lifting by sharing their visited locations.
