Flashing the cash: What are Facebook doing with their acquisitions?

Facebook’s $19 billion acquisition of Whatsapp in February had everybody speculating on what plans the social media behemoth had for the popular app. At Mobile World Congress, Mark Zuckerberg began to lay out just some of the ideas they had in store. However, Whatsapp isn’t the only app that Facebook have bought out in recent years. What do Facebook currently own, and more importantly, what are they doing with their purchases?

Facebook have acquired a great deal of companies over the last few years, starting in 2005. This year alone they have already made three purchases, including Little Eye Labs and Branch as well as Whatsapp. As far as we can see, there seem to be three different reasons why Facebook have bought these companies:

To acquire a team or tech

Several companies, after being bought out, have moved to Facebook’s offices. Little Eye Labs, who create tools for app developers to analyze and measure usage of their apps, wrote an entire post on their website about how their move will be beneficial for both companies.

Companies have also been bought out seemingly to acquire their tech. Sites such as Friendfeed and Threadsy, which are social media aggregators, were bought out but still operate as normal. The purchase of Threadsy, in particular, included a marketing product named Swaylo Pro. The product allows marketers to market directly to social media users. It’s obvious that such a product would be very useful to Facebook, although at the moment it still seems to be running as a separate company.

The purchase of a company may also include important patents that the company may have created. In 2010, Facebook purchased several patents from Friendster, a social gaming website that started life as another social media site. Friendster created many patents that govern the workings of social gaming, and in 2010 Facebook purchased 18 of these. It’s unclear as to whether Facebook now uses this technology with their own in browser games, but it seems very likely.

To shut down competition

There have been several companies bought up by Facebook that have since closed down. Sites such as Lightbox, which was a photo blogging site similar to Instagram, and Friend.ly, yet another social media site, have since shut down after their acquisition by Facebook. There seems to be little information on why they’ve shut down, but it could be because the teams involved in making them have gone on to other projects, or to work for Facebook itself.

To take over competition and gain potential users

One of the most popular theories as to why Facebook are buying up so many other companies is that they’re attempting to take over the competition before they become irrelevant. Forbes point out that Facebook reach out and bring the innovators and market leaders to them, rather than trying to oust them from the marketplace entirely. This is obvious when we look at some of Facebook’s more recent purchases. Tagtile, Instagram and Whatsapp all represent new and exciting ideas in social media, and Facebook takes them on rather than risking being left behind.

Also, buying these companies means they also take on more potential users. With the acquisition of Whatsapp, they stand to take on potentially 450 million active users, a number not to be sniffed at. With many teenagers and young people rejecting Facebook in favour of other social media sites and apps, the site is looking to gain users in any way they can. Buying up the companies the non users do use is a safe bet.

Buying these companies, though, means Facebook doesn’t have to create new ideas for themselves. Why would they, when they have the cash to bring the talent to them? It could be argued that this is why Facebook loses users, as they aren’t looking at improving their own service. However, if they begin to integrate the companies with their existing service, they may become an even bigger force to be reckoned with.

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