Facebook (Nasdaq: FB), owner of the world’s most popular social-networking service, is in talks to acquire mobile-mapping application provider Waze Inc. for as much as $1 billion, two people familiar with the matter said.

The talks to acquire Palo Alto, California-based Waze are not final and a deal may not happen, said the people, who asked not be identified because the talks are not completed.

Facebook, facing competition from Apple Inc. and Google Inc., is adding more features for users who are increasingly turning to smartphones and tablets to access the social- networking service. At $1 billion, an acquisition of Waze would be Facebook’s largest-ever deal after it spent more than $700 million to buy mobile photo-sharing service Instagram last year.

Waze raised $30 million in 2011 in a funding round led by Kleiner Perkins Caufield & Byers and Hong Kong billionaire Li Ka-shing’s Horizons Ventures Hong Kong.

Last month, Waze announced a partnership with IMS Internet Media Services to expand in Latin America. Waze said at the time that it had more than 40 million users.

Waze CEO Noam Bardin and Tucker Bounds, a spokesman for Facebook, declined to comment.

Waze uses information from online communities to improve driving routes. The mobile app alerts users to potential traffic slowdowns or suggest new ways to reach destinations. The service also notifies drivers of speed traps, roadwork and other hazards, thanks to input from users. Waze, a free service, generates revenue via location-based advertising.

News of discussions between Facebook and Waze was reported May 9 by the Calcalist newspaper.

Facebook Settles Timelines Dispute

Earlier this week, Facebook settled litigation with Timelines Inc., a Chicago-based website operator that sued Facebook for trademark infringement.

The companies’ joint filing with U.S. District Judge John W. Darrah in Chicago asked him to dismiss the 2011 lawsuit that was scheduled to go to trial before a jury last month.

“The parties reached an amicable confidential resolution of the matter,” Timelines Chief Executive Officer Brian Hand said in a statement to Bloomberg News.

Timelines, owner of the timelines.com site, sued Facebook one week after the social network announced it was converting its user profile pages previously known as walls to individual chronologies called timelines.

The website Timelines, which has about 94,000 monthly visitors, has held a U.S. trademark on the use of “timelines” for user-created Internet chronologies since 2009, according to court filings.

Its site allows users to create or add content to historical chronologies documenting topics including space exploration, political assassinations, wars and sporting events.