Facebook may keep Waze independent

Roy Goldenberg

However, Facebook's history shows that its strategy has always been to acquire skills rather than companies or products.

If Waze Ltd. is acquired, Facebook Inc. (Nasdaq: FB) will close its third deal in Israel, one more than Google Inc. (Nasdaq: GOOG) and Yahoo! Inc. (Nasdaq: YHOO) each, but fewer than the seven Israeli acquisitions by Microsoft Corporation (Nasdaq: MSFT). Facebook made its first Israeli acquisition in 2011, buying four-year old Snaptu for $70 million. Snaptu had developed an app for regular mobile phones (not smartphones) for accessing social networks, such as Facebook and Twitter.

Following the acquisition, Snaptu's staff moved to Facebook's headquarters in California, joined its mobile division and developed a specialized app for Facebook, as part of the company's attempt to enter emerging markets, which had only just begun to use smartphones.

In June 2012, Facebook made its second Israeli acquisition, buying five-year old face recognition software developer Face.com for $60 million. In this case, some of the start-up's founders and staff abandoned Tel Aviv and moved to Facebook's headquarters, closing down the company behind them and leaving its independent programmers to fend for themselves.

This is the bleak future that may await Waze. Facebook's history shows that its strategy has always been to acquire skills rather than companies or products, what is called acq-hire in the professional jargon. Almost all services, sites and companies bought by Facebook closed shortly after the acquisition. This happened with Snaptu, which had its unique app closed, and with Beluga, which developed an app for immediate messaging to groups.

An exception to the rule, which may offer Waze a rosier future, is Instagram, which was acquired for $1 billion in 2012. Facebook was smart enough to grasp the potential of Instagram's picture sharing app as an independent company, and it continues to operate to this day. Instagram's example suggests that Waze, too, may stay independent, if it is in fact acquired by Facebook.

Published by Globes [online], Israel business news - www.globes-online.com - on May 9, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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