Facebook and all of its Acquisitions

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.

Instagram

  • Acquired for – $1 billion
  • Date of Acquisition – 9th April 2012

Instragram

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.

Whatsapp

  • Acquired for – $19 billion
  • Date of Acquisition – 19th February 2014

Whatsp

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.

Oculus VR

  • Acquired for – $2.3 billion in cash and stock.
  • Date of Acquisition – 25th March 2014.

Oculus

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.

Friend Feed

  • Acquired for – $4.7 million in cash and stock.
  • Date of Acquisition – 10th August 2009.

Friend Feed

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.

Live Rail

  • Acquired for – $500 million in cash.
  • Date of Acquisition – 14th August 2014.

LiveRail

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 NameDate of AcquisitionsAcquired for (USD)
facebook.com (domain name)August 23, 2005200,000
ParaKeyJuly 19, 2007Undisclosed
ConnectUJune 23, 200831,000,000
FriendFeedAugust 10, 200947,500,000
OctazenFebruary 19, 2010Undisclosed
DivvyshotMarch 2, 2010Undisclosed
Friendster patentsMay 13, 201040,000,000
ShareGroveMay 26, 2010Undisclosed
ZenbeJuly 6, 2010Undisclosed
NextstopJuly 8, 20102,500,000
Chai LabsAugust 15, 201010,000,000
Hot PotatoAugust 20, 201010,000,000
drop.ioOctober 29, 201010,000,000
FB.com domain nameNovember 15, 20108,500,000
Rel8tionJanuary 25, 2011Undisclosed
BelugaMarch 2, 2011Undisclosed
SnaptuMarch 20, 201170,000,000
RecRecMarch 24, 2011Undisclosed
DayTumApril 27, 2011Undisclosed
SofaJune 9, 2011undisclosed
MailRankJune 9, 2011undisclosed
Push Pop PressAugust 2, 2011undisclosed
Friend.lyOctober 10, 2011undisclosed
StrobeNovember 8, 2011undisclosed
GowallaDecember 2, 2011undisclosed
CaffeinatedmindFebruary 20, 2012undisclosed
InstagramApril 9, 20121,000,000,000
TagtileApril 13, 2012undisclosed
GlanceeMay 5, 2012undisclosed
Lightbox.comMay 15, 2012undisclosed
KarmaMay 21, 2012undisclosed
Face.comJune 18, 2012100,000,000
SpoolJuly 14, 2012undisclosed
Acrylic SoftwareJuly 20, 2012undisclosed
ThreadsyAugust 24, 2012undisclosed
Atlas SolutionsFebruary 28, 2013<100,000,000
osmetaMarch 2013undisclosed
Storylane (Mixtent)March 2013undisclosed
Hot StudioMarch 14, 2013undisclosed
SpaceportApril 23, 2013undisclosed
ParseApril 23, 201385,000,000
MonoidicsJuly 18, 2013undisclosed
JibbigoAugust 12, 2013undisclosed
OnavoOctober,13, 2013undisclosed
SportStreamDecember 17, 2013undisclosed
Little Eye LabsJanuary 8, 201415,000,000
BranchJanuary 13, 201415,000,000
WhatsAppFebruary 19, 201419,000,000,000
Oculus VRFebruary 19, 20142,000,000,000
AscentaMarch 27, 201420,000,000
ProtoGeo OyApril 24, 2014undisclosed
PrivateCoreAugust 7, 2014undisclosed
LiveRailAugust 14, 2014400,000,000 – 500,000,000
WaveGroup SoundAugust 26, 2014undisclosed
Wit.aiJanuary 6, 2015undisclosed
Quickfire NetworksJanuary 8, 2015undisclosed
TheFind, Inc.March 14, 2015undisclosed
Surreal VisionMay 26, 2015undisclosed
EndagaOctober 3, 2015undisclosed
PebblesJuly 16, 201560,000,000
MSQRD (Masquerade)March 9, 2016undisclosed
Two Big EarsMay 23, 2016undisclosed
Nascent ObjectsSep 19, 2016undisclosed
InfiniledOctober 10, 2016undisclosed
CrowdTangleNovember 11, 2016undisclosed
FaciometricsNovember 16, 2016undisclosed
Zurich EyeNovember 2016undisclosed
OzloJuly 31, 2017undisclosed
Fayteq AGAugust 2017undisclosed
tbhOctober 16, 2017undisclosed
ConfirmJanuary 23, 2018undisclosed
Bloomsbury AIJuly 201830,000,000
RedkixJuly 26, 2018100,000,000
VidpressoAugust 13, 2018undisclosed
DreambitNovember, 2018undisclosed
ChainspaceFebruary 2019undisclosed
GrokStyleFebruary 8, 2019undisclosed
ServicefriendFebruary 8, 2019undisclosed
September, 2019November, 2018undisclosed
CTRL-labsSeptember, 2019undisclosed, but reportedly between $500 million and $1 billion

Do you know what the position of Mark Zukerberg is in the list of richest people in the world?

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