Facebook and all of its Acquisitions
Two college mates from Harvard University, Mark Zuckerberg and Eduardo Saverin started the biggest social networking website in the year 2004 which we all know as Facebook. Initially, the website was named as ‘FaceMash’, later it was changed to ‘The Facebook’ and, on the suggestion of Sean Parker who was the co-founder of ‘Napster’ they decided to drop “the” from the name and since then it is called ‘Facebook’. As it was becoming famous they decided to expand its services across all Ivy League Institutions and later in other educational institutions as well. Gradually it became accessible to everyone around the world who claims to be older than 13 years of age and has a valid e-mail address. After they turned out to be profitable in the year 2010, Facebook went for their IPO in the year 2012.
Since the day of inception, Facebook has been led by Mark Zuckerberg as he is the Chairman and CEO of the biggest social networking site. Sheryl Sandberg is the Chief Operating Officer of Facebook, Dave Wehner is the Chief Financial Officer, Mike Schroepfer is the Chief Technology Officer and Chris Cox is the Chief Product Officer of Facebook.
Being one of the top tech and omnipresent companies in the world that affects productivity everywhere, Facebook always stays in news. When we talk about recent mergers and acquisitions by Facebook, it has acquired a blockchain service company, ’Chainspace’ which is their first acquisition in blockchain industry and retail computer vision services developer ‘GrokStyle’ both in February of 2019.
Facebook Revenue Growth
As on 1st March 2019, Facebook has a market capitalization of over $450 billion. In early 2019, they released their 2018 financial figures that show they had total revenue of over $55 billion which is 37% more than the revenue of 2017 which was around $40 billion. Their EPS (earning per share) is valued around $7.57 in 2019 which is 40 per cent more than 2017 EPS of $5.39.
Highlighted Points from the Article
- Facebook has aggressively acquired various companies in different fields since starting.
- Strategies to Increase their earning is through diversification.
- Acquisitions that are outside the industry of a social networking company to buy.
- Purchase of Instagram and WhatsApp in the year 2012 and 2014 respectively.
Top 5 companies acquired by Facebook
Facebook has adopted an aggressive strategy for acquiring companies from different industries. They have acquired various companies like WhatsApp and Instagram for over a billion dollars and converted them into multi-billion dollar companies. Following is a list of top companies which was acquired by Facebook till now.
- Acquired for – $1 billion
- Date of Acquisition – 9th April 2012
Instagram is a popular media sharing application which was launched by Kevin Systrom and Mike Krieger on 6th October 2010. Despite the fact that Instagram was not generating any kind of revenue but still Facebook bought it for a $1 billion and now its net worth over $100 billion. Major part of its revenue is generated from on-platform advertisements.
It is not wrong to say that acquiring Instagram was the best thing happened to Facebook as it generates more advertising revenue than its parent company. Estimated annual revenue of Instagram is around $8 billion or maybe more. Instagram has also helped Facebook to transfer its users from a web browser to an application based platform, due to which there was a drastic growth in the total user of Instagram as it currently has over $1 billion, active user.
- Acquired for – $19 billion
- Date of Acquisition – 19th February 2014
WhatsApp is a messaging and calling application which is used worldwide. It was founded by Jan Koum and Brian Acton in the year 2009 as an alternative of SMS services at a low cost. WhatsApp offers free messaging and calling service to the other users of this application, regardless of their location and time zone.
Whatsapp used to generate revenue from its initial purchase of $1 or in some areas it was a yearly $1 service fee. It is estimated that WhatsApp is going to reach annual revenue of $5 billion by the year 2020. However, how this application has been monetized is yet unclear. But WhatsApp remains a free messaging and calling app and one thing that makes it user-friendly that it doesn’t support ads. Therefore, it has an active user base of 1.5 billion which is more than Instagram.
- Acquired for – $2.3 billion in cash and stock.
- Date of Acquisition – 25th March 2014.
This tech company was founded by Palmer Luckey, Brendan Iribe, Michael Antonov, Jack McCauley and Nate Mitchell in the year 2012 as a virtual reality technology company. It is best known as Oculus Rift which designs VR (virtual reality) headset to make your gaming experience more realistic.
Recently they launched their first-ever stand-alone virtual reality headset which can be operated without a console attachment as Oculus Go. Well, Facebook has never revealed the revenue of Oculus but it is clear that they are aiming to dominate the virtual reality software and hardware market.
After Facebook purchased Oculus VR in the year 2014, this supplementary has purchased various companies of its own. One of the most crucial acquisitions was made in the year 2015 when they purchase Surreal Vision, a company specializing in 3D scene mapping reconstruction.
- Acquired for – $4.7 million in cash and stock.
- Date of Acquisition – 10th August 2009.
Friend feed is one of the first companies that were purchased by Facebook. Currently it is not an active brand of its parent company but still, it holds its importance in the history of Facebook. FriendFeed served as an aggregator, drawing together information from social media sites, blogs, and RSS-type feeds. FriendFeed was eventually shut down in 2015, but its services and aesthetic live on in many of the features of Facebook’s News Feed, a core component of the Facebook user experience.
- Acquired for – $500 million in cash.
- Date of Acquisition – 14th August 2014.
Live Rail was founded in the year 2007 by Andrei Dunca, Mark Trefgarne and Sergiu Biriș and it was acquired by Facebook in the year 2014 for almost $500 million. It helps the publisher of the video by providing them the data and technology required for video advertising so that they can identify and target their audience. After facebook purchased Live Rail, they shifted its focus points – slowly it removes the company’s bidding network and incorporates its projects into the main brand. It is said that integrating LiveRail into the Facebook umbrella did not go as smoothly as it was planned.
Recent Acquisitions and Acquisition Strategy
Facebook is now included in the top companies in the world, therefore, they are searching for new and better ways to make more money. The main strategy of Facebook to grow and earn more profit is through diversification. Facebook is focused on acquiring various companies from different fields since 2014.
Except Oculus VR, facebook bought many other companies like Ascenta and ProtoGeo in the year 2014. Ascenta is a company that makes drone with they are planning to use it to bring internet to everywhere in the world. ProtoGeo will help Facebook to enter into the market of health and fitness monitoring.
They also acquired a video software company called ‘Vidpresso’ in the year 2018 an undisclosed amount of money and Redkix, which is a messaging app for over $100 million as they are planning to unify its messaging platforms like Whatsapp, FB messanger and Instagram DM on one platform.
Following is a list of Facebook all Acquisitions
|Company Name||Date of Acquisitions||Acquired for (USD)|
|facebook.com (domain name)||August 23, 2005||200,000|
|ParaKey||July 19, 2007||Undisclosed|
|ConnectU||June 23, 2008||31,000,000|
|FriendFeed||August 10, 2009||47,500,000|
|Octazen||February 19, 2010||Undisclosed|
|Divvyshot||March 2, 2010||Undisclosed|
|Friendster patents||May 13, 2010||40,000,000|
|ShareGrove||May 26, 2010||Undisclosed|
|Zenbe||July 6, 2010||Undisclosed|
|Nextstop||July 8, 2010||2,500,000|
|Chai Labs||August 15, 2010||10,000,000|
|Hot Potato||August 20, 2010||10,000,000|
|drop.io||October 29, 2010||10,000,000|
|FB.com domain name||November 15, 2010||8,500,000|
|Rel8tion||January 25, 2011||Undisclosed|
|Beluga||March 2, 2011||Undisclosed|
|Snaptu||March 20, 2011||70,000,000|
|RecRec||March 24, 2011||Undisclosed|
|DayTum||April 27, 2011||Undisclosed|
|Sofa||June 9, 2011||undisclosed|
|MailRank||June 9, 2011||undisclosed|
|Push Pop Press||August 2, 2011||undisclosed|
|Friend.ly||October 10, 2011||undisclosed|
|Strobe||November 8, 2011||undisclosed|
|Gowalla||December 2, 2011||undisclosed|
|Caffeinatedmind||February 20, 2012||undisclosed|
|April 9, 2012||1,000,000,000|
|Tagtile||April 13, 2012||undisclosed|
|Glancee||May 5, 2012||undisclosed|
|Lightbox.com||May 15, 2012||undisclosed|
|Karma||May 21, 2012||undisclosed|
|Face.com||June 18, 2012||100,000,000|
|Spool||July 14, 2012||undisclosed|
|Acrylic Software||July 20, 2012||undisclosed|
|Threadsy||August 24, 2012||undisclosed|
|Atlas Solutions||February 28, 2013||<100,000,000|
|Storylane (Mixtent)||March 2013||undisclosed|
|Hot Studio||March 14, 2013||undisclosed|
|Spaceport||April 23, 2013||undisclosed|
|Parse||April 23, 2013||85,000,000|
|Monoidics||July 18, 2013||undisclosed|
|Jibbigo||August 12, 2013||undisclosed|
|SportStream||December 17, 2013||undisclosed|
|Little Eye Labs||January 8, 2014||15,000,000|
|Branch||January 13, 2014||15,000,000|
|February 19, 2014||19,000,000,000|
|Oculus VR||February 19, 2014||2,000,000,000|
|Ascenta||March 27, 2014||20,000,000|
|ProtoGeo Oy||April 24, 2014||undisclosed|
|PrivateCore||August 7, 2014||undisclosed|
|LiveRail||August 14, 2014||400,000,000 – 500,000,000|
|WaveGroup Sound||August 26, 2014||undisclosed|
|Wit.ai||January 6, 2015||undisclosed|
|Quickfire Networks||January 8, 2015||undisclosed|
|TheFind, Inc.||March 14, 2015||undisclosed|
|Surreal Vision||May 26, 2015||undisclosed|
|Endaga||October 3, 2015||undisclosed|
|Pebbles||July 16, 2015||60,000,000|
|MSQRD (Masquerade)||March 9, 2016||undisclosed|
|Two Big Ears||May 23, 2016||undisclosed|
|Nascent Objects||Sep 19, 2016||undisclosed|
|Infiniled||October 10, 2016||undisclosed|
|CrowdTangle||November 11, 2016||undisclosed|
|Faciometrics||November 16, 2016||undisclosed|
|Zurich Eye||November 2016||undisclosed|
|Ozlo||July 31, 2017||undisclosed|
|Fayteq AG||August 2017||undisclosed|
|tbh||October 16, 2017||undisclosed|
|Confirm||January 23, 2018||undisclosed|
|Bloomsbury AI||July 2018||30,000,000|
|Redkix||July 26, 2018||100,000,000|
|Vidpresso||August 13, 2018||undisclosed|
|GrokStyle||February 8, 2019||undisclosed|
|Servicefriend||February 8, 2019||undisclosed|
|September, 2019||November, 2018||undisclosed|
|CTRL-labs||September, 2019||undisclosed, but reportedly between $500 million and $1 billion|