Facebook Acquiring Waze? 5 Reasons Why A Billion-Dollar Deal Is Chump Change For The Social Network

Facebook Inc. is reported to be in talks to acquire Waze, the crowdsourcing navigation app that won Best Overall at the 2013 Mobile World Congress, for $1 billion.

Waze collects data via crowdsourcing to determine road closures, heavy traffic and even speed traps, in addition to its navigation functions. Here are five reasons why Waze is worth so much to Facebook:

1. Better, More Accurate Data

Advertising is the main source of revenue for Facebook -- its bread and butter. The Menlo Park, Calif., social network knows what we like, because we tell the service on a regular basis; Facebook is then able to tailor advertising around those Likes. Having Waze would give Facebook even more information about its users, such as the stores they regularly shop at, the restaurants where they like to eat and the friends they spend the most time with.

All of this data would make targeted advertising that much more accurate and, therefore, much more valuable to Facebook’s sponsors.

2. Competing With Yelp, Groupon

Local business directory and review site Yelp has a lot of features that Facebook might envy, including an army of local advertisers and steady following of users looking to find or review a nearby restaurant or hair salon.

By using Waze to collect more localized data, Facebook can allow users to review the businesses they support and maybe even flag down drivers approaching a big sale or lunch special.

Facebook’s Deals product was canceled, brought back and eventually killed again. Armed with a GPS navigation app like Waze, Facebook might finally be able to create a revenue-generating daily deal platform.

3. Sharing More On The Road

Using our mobile technology while driving is sometimes frowned upon, but "shouting out" a user’s location, as well as the stops they are making, allows Facebook to collect data and encourage users to share more while they are on the move.

Facebook already has a Locations feature, and it may become a larger part of the social network's ecosystem if the network acquires Waze.

4. Improving Facebook Graph Search

Facebook launched Graph Search earlier this year, which allows users to group their friends based on shared interests, locations, education and other biographical details. Users can ask specific questions such as “Which friends of mine live in Boston and like 'Arrested Development'?” and see the results.

Using Waze to acquire data that gives a more detailed understanding of how and where users are spending their time could allow Facebook to improve on products that rely on such information, in addition to simultaneously improving the company's advertising.

5. Competing With Google Now

Google Now, the new service on iPhone and Android, tracks a user's previous searches to compile real-time data the user might need or want, such as weather, sports scores and traffic, which is then aggregated and displayed in a clean and simple "card."

Facebook may be getting jealous of all of the press that Google Now is receiving. It appears Facebook wants a way to use Waze to offer a product suite similar to Google search and Apple's Siri and compile more personal data for its own purposes in the process.

Facebook has a billion reasons why it could want Waze, but it probably has a lot to do with all of the user data it will acquire in the process.

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