Facebook is on a spending spree, shelling out billions and billions of dollars on both small and large companies that the social network will either fold into its umbrella or tap to improve experiences.
Facebook has gobbled up roughly 50 companies since 2005, and most of them are considered talent acquisitions. The biggest purchases however - including Instagram, WhatsApp, and Oculus VR - are some of the most notable exceptions, because Facebook plans to use them for global and mobile dominance.
More recently, Facebook snatched up development company ProtoGeo Oy and its Moves app. If you'd like to know why, Pocket-lint has examined the purchase, as well as the social network's headlining acquisitions in recent years, and detailed all the possible reasons. Keep reading to find out more.
Have you seen The Social Network? Well, the ConnectU acquisition ties into the drama of that film.
Here's a summary: Cameron Winklevoss and Tyler Winklevoss co-founded a social network of sorts called HarvardConnection (later renamed ConnectU). They claimed to come up with Facebook first, and that Mark Zuckerberg and Facebook's co-founders stole their idea. Facebook denied those claims. During a global mediation, both parties signed an agreement to achieve litigation peace.
As part of the deal, Facebook agreed to purchase ConnectU. Later, the Winklevoss twins - nicknamed Winklevii - tried to get more money for ConnectU by asking for its share to be reevaluated. They also wanted the transaction to be labeled a merger instead of an acquisition so they wouldn't have to pay certain tax.
Yadda, yadda, yadda. Facebook eventually purchased ConnectU. It has been operating ConnectU since 2008, though the website itself is technically inactive.
READ: Facebook buys FriendFeed
Launched in 2007, FriendFeed is a real-time feed aggregator. It serves up updates from not only social media and social networking websites but also blogs and any other type of RSS or Atom feed. In 2009, Facebook bought FriendFeed for $15 million in cash and $32.5 million in Facebook stock.
The FriendFeed team was a major selling point, because it included ex-Googlers and Gmail creator Paul Buchheit. Facebook also already borrowed quite a few features that FriendFeed made popular - such as an adaptation of the ‘Like’ button. The acquisition later helped Facebook to focus on real-time news feed updates as well, without requiring users to manually refresh their page.
Launched in 2009, Nextstop featured short recommendations of places around the world, along with photos, maps and factual information. Ex-Googlers like Carl Sjogreen and Adrian Graham, who helped create products like Google Calendar, Google Groups, and Picasa, founded the company.
Facebook acquired the startup in 2010, with the social network gaining most of Nextstop's employees and assets. The site shut down later that year. When the buyout completed, many reports noted Facebook had a habit of acquiring companies for their engineering talent. Facebook seemed to prefer building products in-house or letting third parties contribute to the Facebook experience.
Mark Zuckerberg, CEO of Facebook, later confirmed that Facebook usually buys companies to get excellent people and that it focuses on acquiring great companies with great founders.
Facebook acquired Hot Potato, a New York-based startup that specialised in social activity updates, in 2010. The service shut down operations shortly after, and Hot Potato's eight employees, most of which were developers, joined Facebook. Justin Shaffer, CEO of Hot Potato and a longtime veteran of pro baseball’s MLB.com website, was the first to start at the social network.
Although Facebook did not reveal how the acquisition would affect Facebook, most reports speculated it would improve the functionality around status updates and the Facebook Places feature, as well as real-time updates and stream of chatter/commentary for events.
Facebook acquired most of the assets of Drop.io, a start-up that allowed users to privately share files through a drag-and-drop interface with additional options like phone calls and faxing, in 2010.
The company's founder, Sam Lessin, joined Facebook full time, while Drop.io shut down quickly after, meaning the acquisition was yet another "acqui-hire" for Facebook. Lessin, who attended Harvard University with Zuckerberg, and who had been an angel investor in Hot Potato, was apparently also influential in Facebook's decision to acquire Hot Potato.
Facebook acquired Friend.ly in 2009. It's social Q&A website, which allows users to post questions on different subjects and get them answered, and it also has a similar Facebook app designed to help users pose questions to online friends. Facebook continued to operate as Friend.ly as a separate service, and it said the Friend.ly team would also focus on new projects at Facebook.
It's unclear what the Friend.ly team has done at Facebook during the last five years.
This acquisition was a game changer. Up until 2012, Facebook spent millions on other companies. But now it spends billions. Specifically, Facebook bought Instagram for $1 billion in cash and stock, making it the social network's biggest acquisition to date (at the time).
Instagram lets users share photos and apply stylised filters, and it has become one of the most downloaded apps on iPhone and Android. With Instagram, Facebook became a formidable mobile player - an area that the social network has since dominated, with Facebook announcing in April 2014 that it hit 1 billion monthly active mobile users.
Instagram also gave Facebook another avenue for pushing ads. In 2013, Facebook officially launched an Instagram ad platform.
Shortly before going public, Facebook closed a deal to hire most employees from Android photo-sharing app developer Lightbox. The Lightbox Photos app was promptly shut down and removed from app stores. Apart from being an acqui-hire, many reports claimed the buyout (similar to Instagram) would assure investors that Facebook had its eye on mobile.
In May 2012, Facebook announced it had acquired mobile gift-giving app and 16-person startup Karma. The deal totaled more than $80 million. However, unlike past acquisitions, Facebook didn't buy Karma for its talented engineers. The social network had planned to continue running Karma’s service, because it wanted to tackle online commerce. Specifically, gift shopping.
However, Facebook launched Facebook Gifts in December 2012. Viewed as the rebirth of Karma, the service turns user data into suggestions for gifts to buy. Facebook earns a percentage of sales when you Facebook Gifts to buy friends physical products or digital gift cards for their birthdays or special occasions.
Facebook bought Israeli startup specialising in facial recognition technology known as Face.com. The service provided software that allowed Facebook's members to identify and tag photos of their friends. It simply scanned photos Facebook users upload, and then it suggested friends you may wish to tag. With the buyout announcement, Face.com announced it was winding up APIs to "focus on new products at Facebook".
Facebook acquired the team and technology behind Pittsburgh’s Mobile Technologies, a speech recognition and translation startup that developed the app Jibbigo. Facebook said it would continue to support Jibbigo "for the time being" - but that members of the Mobile Technologies team would join Facebook's engineering teams in Menlo Park.
Jibbigo launched in 2009. It allowed you to select from over 25 languages and record a voice clip or type in text. It would then serve up a translation. From voice search to translating News Feed posts, many reports noted that Facebook could to a lot with the company's technology.
Facebook added 10 new people to its talent pool in January 2014, thanks to the acquisition of Branch and Potluck for a reported $15 million. Those services immediately became a part of Facebook.
Josh Miller and Cemre Güngör founded social platform Branch in 2012 with backing from Twitter co-founders Ev Williams and Biz Stone. He later launched Potluck, a web and mobile app "designed for friends to hang out and talk about cool things they find online".
Facebook, which has a history of gobbling up smaller companies, reportedly asked Miller to build Branch at "Facebook scale", though both Branch and Potluck have continued to live on outside of Facebook.
Facebook announced in February 2014 that it planned to acquire hit messaging app WhatsApp for a whopping $16 billion, in a deal that it said would help accelerate growth and user engagement across both companies.
WhatsApp, technically called WhatsApp Messenger, uses your 3G or Wi-Fi to send and receive messages. It's available across iOS, Android, Windows Phone, and BlackBerry. Users can switch from the traditional SMS to WhatsApp to send and receive things like pictures, audio notes, and video messages. The first year is free, then costs 99 cents every year after.
WhatsApp is a huge success in international markets. But that's not all - WhatsApp is also more popular than Facebook in emerging markets, according to data published by The Information. The report claimed mobile users in India, Brazil and Mexico were more likely to use WhatsApp than Facebook for their messaging needs.
With the buyout, Facebook will gain access to the 450 million people using the WhatsApp service monthly (with 1 million new sign-ups daily). WhatsApp will also garner Facebook's huge resources, including its large cash backing and infrastructure.
Zuckerburg wrote on his personal Facebook page that the social network will not interfere with the WhatsApp brand, and will allow it to keep operating. WhatsApp will remain separate from Facebook's Messenger app, which ironically, sits ahead of WhatsApp on the iTunes App Store. WhatsApp will remain at its Mountain View headquarters and keep with its same product roadmap.
Facebook purchased virtual reality company Oculus VR for $2 billion in March 2014. Oculus VR is the creator of the Oculus Rift, a headset that has been leading the virtual reality space. Facebook said it planned to extend Oculus' existing position in gaming to new verticals, including communications, media and entertainment, education, and more.
"After games, we're going to make Oculus a platform for many other experiences," said Zuckerberg in a statement. "Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face, just by putting on goggles in your home."
It was previously announced the consumer version of the Oculus Rift would release in late 2014 or early 2015. Neither Oculus nor Facebook confirmed how the acquisition would affect that timeline. That said, Oculus VR will maintain its headquarters and continue development of the Oculus Rift, Facebook said.
The Oculus VR buyout appears to be an expansion of Facebook company's portfolio. Facebook seems keen to avoid putting all its eggs in one basket.
And finally, in April 2014, Facebook added Moves, the fitness tracking application and its ProtoGeo Oy development company, to a long list of other app acquisitions that includes WhatsApp and Instagram. Moves will continue to operate as a standalone application. Also, initially, Facebook said it is not interested in incorporating the fitness technology into its own services. The social network appears to be strictly interested in expanding.
Zuckerberg has said Facebook's mission is to "unbundle the big blue app". It wants to provide multiple and different experiences on mobile - and Facebook's name doesn't have to be attached.
"Facebook is not one thing," he told The New York Times in April 2014. "On desktop where we grew up, the mode that made the most sense was to have a website, and to have different ways of sharing built as features within a website. So when we ported to mobile, that’s where we started — this one big blue app that approximated the desktop presence."
Think of Facebook as a hub that is constantly growing and changing. It has some products that are doing well, some that are growing, some that are in the works, and others that have died. But Facebook is trying, especially through acquisitions. So far, it has Facebook Home, Instagram, Messenger, and Paper, and Zuckerberg sees WhatsApp and similar buyouts as just another means of expanding Facebook's multifaceted reach.
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