REPORT: Fate Of Israel Development Center, Employees Holding Up Facebook-Waze Talks

Facebook’s efforts to acquire satellite navigation startup Waze in a deal potentially valued at as high as $1 billion have hit a major roadblock, as Israeli daily newspaper Calcalist reported that Waze’s co-founders and CEO are balking at the shuttering of the company’s development center in Israel and the relocation of some of its employees to the social network’s headquarters in Menlo Park, Calif.

Facebook’s efforts to acquire satellite navigation startup Waze in a deal potentially valued at as high as $1 billion have hit a major roadblock, as Israeli daily newspaper Calcalist reported that Waze’s co-founders and CEO are balking at the shuttering of the company’s development center in Israel and the relocation of some of its employees to the social network’s headquarters in Menlo Park, Calif.

According to Calcalist, Waze Co-Founders Ehud Shabtai, Uri Levine, and Amir Shinar, as well as CEO Noam Bardin, are sticking to their guns on retaining the development center in Israel and the 100 or so employees based there, while Facebook is making the acquisition contingent on liquidating Waze’s activities in Israel and relocating select employees.

Calcalist added that Waze shareholders BlueRun Ventures and Horizons, which own 19 percent and 11.6 percent, respectively, of the company, are pushing for completion of a deal with Facebook, while Magma Fund (17.6 percent) and Microsoft (10.2 percent) are attempting to mediate the dispute.

Business Insider also shared three theories from industry sources about why Facebook is interested in acquiring Waze:

Source No. 1

Facebook is buying Waze because each of the major tech companies wants to own a mapping service. Microsoft, Google, and Apple each own one. Now, so would Facebook.

Waze is a crowdsourced map. Users turn on Waze and as they drive around, roads are drawn. They can tell traffic by how fast people are moving around on the roads via GPS.

If you put, like, 1 billion users on it, the map becomes really accurate. If Facebook is committed to local search (pretty clearly, it is), it would be helpful to have a maps user interface, in addition to a search UI — particularly one with road data that they can use their platform to make significantly more accurate and valuable.

Another example of all of the big tech companies grabbing their own maps: Last week, Alibaba took a huge stake in AutoNav, a German maps company with a strong foothold in China.

A map will be a key interface for local discovery and commerce going forward, and Waze had a great one that Facebook uniquely could make a lot better.

The bottom line: Waze will improve Facebook’s local search, which is an increasingly important — and monetizable — application on mobile.

Source No. 2

Facebook is buying Waze so Facebook Home doesn’t have to punt people over to Google Maps.

Furthermore, Facebook is probably stressed about Google playing the “If you are going to run a Facebook skin over our Android operating system, we’re going to make it so that your Facebook skin can’t use Google Maps” card.

I think it’s very obvious now that the future of maps and local is “social maps.” It will be really interesting to see how the space evolves in the next few months.

The bottom line: Facebook believes maps are a core mobile application that it needs to own, even on Google devices. Waze can help it make social mapping software that users will prefer over Google Maps.

Source No. 3

The simplest and most important reason is that Waze is an awesome, quickly essential to-users mobile application, and mobile “real estate” is what Facebook desperately needs.

Facebook needs apps with strong enough appeal that they cannot be displaced by the “house” apps from Apple or Samsung (or Google, etc.).

Reason two is that Waze lets you see where your friends are. That’s a bigger value than just driving. But unlike check-ins, the user doesn’t need to do anything. So, integrated with the Facebook social graph, that’s amazing.

The last reason is that buying Waze helps Facebook realize its vision for the News Feed — a content feed that knows everything about you, and can use this information to determine what you need and want to see at that very moment. A big part of knowing everything about you is knowing where you are at that moment.

The bottom line: Owning Waze gives Facebook more mobile usage, and might even make its core product, News Feed, more robust.

Readers: Do you think Facebook will be successful in its attempt to acquire Waze?