June 12, 2013: After weeks of rumors, Google finally won the Waze Dot Race, paying an estimated $1B for the Israeli-based traffic start-up. Since Google already has traffic, maps and a team, the move has been described as a “blocking” move; a move to keep Waze out of the hands of Google’s rivals who might want to use it to build competitive service in the mapping, navigation and traffic markets.
If it is a blocking move (and I think that’s a good partial explanation. For more talking head stuff, see here), it begs the question of what precisely are they blocking…what do they want to tie up, away from competitors, that is worth that much money?
What they’re not blocking: The Waze app.
The Waze app has had a lot of success, with 47+M downloads and an undisclosed number of active users. It has a lot of passion in the user base as seen in the comments about the deal. But I don’t think Google paid that much just to keep the app out of the hands of others like Facebook or Apple. It’s a good app but not a $1B app. I think the app will do well and that the Google navigation user base will drive more adoption. I think there’s a nice tie in to Google’s ambitions with Google +. But Google could have built that on its own for a lot less.
The Real Target: Independent Map Data
Google is killing it in the mapping world, arguably pulling away from the competition. They are doing this significantly because they own and control their own map data. They can build great, interactive map features without having to worry about either paying the commercial map vendors or hassling with their terms and conditions. They can update the data at will and design highly interactive user experiences without worrying that they have to pay for all those map “transactions” that others have to pay. In the future, this independence will give them an increasing advantage to build better experiences. And significantly, they will also collect much more data than their rivals.
Google’s biggest risk in maps is that someone else copies that advantage.
Waze was doing that by using driver traces to build a map database of the road network. Think of it as if every driver were an Etch-a-Sketch point, writing a trace on a blank sheet. Multiply that by millions of drivers, driving tens of millions of miles, give it time and you draw a road network. Add some hard work and you pull out things like turn restrictions, road categories, etc. It’s hard and fraught with issues (see excellent Mike Dobson piece), but according to people who should know, they were doing it. And it was Waze’s property.
Buying that data set, plus the Waze team, would give a competitor not only a jump start into a mapping platform (the software that draws the maps, geocodes, routes, etc) but also to a proprietary map data base layer. That’s something rare and hard to do. Apple has the platform but not the data (they use TomTom and others). Yahoo and Microsoft use Nokia. No one else, except Nokia and TomTom own their own data.
Google didn’t need that data. They have their own. That’s not why they did this deal. But buying Waze makes sure that none of their competitors get a head start in covering that competitive advantage.
That’s what they were blocking.
Where does that leave the others? Companies like Facebook, Amazon, Samsung, Microsoft, Apple and others who may want to own the mobile mapping data? Those options are another blog, but they look like this:
- Play as aggressively as you can with the commercial map data providers
- Buy one of the commercial map data providers
- Start from scratch and build your own
- Use OpenStreetMap. You won’t own it but you will get a map that’s may become the best in a short time.
What do you think? Is that what Google was blocking? What am I missing?