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‘Waze sale to Facebook crashes over relocation dispute’

Israeli start-up’s insistence on remaining local rather than moving to US reportedly punctures billion-dollar deal

Screen capture of a Waze video clip illustrating the thinking behind the application. (photo credit: Waze/YouTube)
Screen capture of a Waze video clip illustrating the thinking behind the application. (photo credit: Waze/YouTube)

It appears that the Facebook-Waze deal — in which the world’s largest social network would acquire the world’s most popular social mapping app for drivers — is off.

Reports on several tech websites Thursday said that talks between the two companies had broken down, apparently over the insistence by Facebook that Waze relocate its operations abroad, and Waze’s insistence that it remain in Israel, the sources said.

The reports on the breakdown of talks between Waze and Facebook followed news last weekend that Google was also courting Waze. According to those reports, Google and Waze have conducted secret talks over the past few weeks in California. One of the impetuses for the talks was, apparently, the revelation that Facebook was in talks to buy the company. Those reports also said that Waze was considering an IPO.

Some Israeli analysts were surprised that the Facebook deal has not gone through. Unlike Google and Apple — also said to have been a former Waze suitor, with the device maker offering to buy the Israeli company for $400 million — Facebook does not have a driving app. Waze has built an active and loyal social network, one that is highly engaged with the app — just the kind of user Facebook craves, said local social-media expert Yotam Tavor.

Waze also has a built-in mobile ad platform, and in its latest version supplies Google Maps-like recommendations. “That’s a big plus for Facebook, in the ongoing war for interaction with users,” and a plus for Waze, which wants to ally with a big company in order to remain relevant, given Google’s plans for its Waze-like Navigator app, Tavor added.

For Waze, the advantage in a deal with Facebook would have been integration into the world’s largest social network, as well as access to the kind of money the company needs to further develop its app. Analysts believe that in order for Waze to compete with Google and Apple, which also has a mapping and driving app, the company will need to either go public, or join a cash-rich company that can help Waze expand services and users.

Despite the advantages for both sides, the issue of relocating the company abroad, versus allowing it to remain in Israel, reportedly turned out to be more of a problem than anyone expected. Facebook was said to have insisted that Waze move its operations to one of the company’s existing R&D facilities — in London, New York, or Silicon Valley — while Waze insisted on remaining in Israel. The issue turned out to be a far more serious one for the two companies — serious enough, apparently, to trash the talks, Tavor said.

If, as rumored last weekend, Google is now in talks to buy Waze, relocation is unlikely to be an issue. Google already has several R&D facilities in Israel, and employs hundreds of engineers here. This means that integrating the already existing Waze group into the Google infrastructure would be much simpler than getting Waze integrated with Facebook, continued Tavor.

Meanwhile, Waze announced Thursday that it was coming out with a new version of its app: the main change, ironically, is integration with Facebook events.

A company source contacted by The Times of Israel had no comment on whether or not talks with Facebook, Google, or any other party were on or off. “We don’t comment on rumors and speculation in general,” the source said.

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