Some of the biggest companies acquired by Facebook have helped the company successfully transition from being a PC-focused play to a mobile-focused company. Acquisitions are one of the quickest ways for companies to grow and develop further. Bigger companies gobble up their smaller counterparts not only to increase their revenue and expand their businesses, but also to add much needed diversification. It even sometimes helps to eliminate some future competition.
If you’re interested in further acquisitions-related reading, be sure to check out The 12 Most Expensive Acquisitions Made by Google.
Conceived in a dorm room, Facebook Inc (NASDAQ:FB) has grown to become the biggest social media company in the world. It has also shelled out billions of dollars in recent years to retain its position as the top player in the social media industry today. Facebook, which is the world’s third-most visited website according to Alexa, has been making acquisitions to acquire talent, brands and improve the company’s mobile offerings; most of the acquisitions listed below were done to further strengthen the latter. WhatsApp has been its costliest buy to date, setting Facebook back by a mind-blowing $19 billion, but given WhatsApp’s success, the massive expense seems worth it.
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As a developing technology company, Facebook needed the best industry talent and engaging features so that its subscribers kept coming back for more. It has been extremely successful in its M&A strategy, though many of the acquired companies have been shut down as individual entities, they helped Facebook become the iconic brand that it is today. Some of the best features of the site, including the “like” button and the newsfeed, came about through some of its acquisitions. Today there is almost no rival to Facebook in the social media industry.
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In addition to acquisitions, the company has also entered into successful partnerships with firms like Skype and Zynga to enhance user experience in video calling and gaming.
In the following list of the 11 biggest companies acquired by Facebook, we have ranked the acquisitions made by Facebook based on their price tags.
11. ConnectU – $31 million in 2008
How can ConnectU be left out when talking about the biggest of Facebook’s acquisitions? After all, it was the highest price paid by Facebook for a company at the time, and the transaction ended up generating a fair bit of controversy.
ConnectU was a social networking website started by three Harvard students in 2004, who later went on to accuse Mark Zuckerberg of plagiarizing their idea of a social networking site. In 2008, Facebook agreed to pay $65 million (including $20 million in cash and 1.25 million shares) to buyout ConnectU. However, the Winklevoss brother filed a case that they were shortchanged, as the value of the Facebook shares was misrepresented. They lost the case and it was inferred that Facebook actually ended up paying only $31 million to ConnectU. The story was filmed in the movie “The Social Network”, which was nominated for several Oscars, winning three.
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10. FriendFeed – $47.5 million in 2009
FriendFeed, the next one on the list of biggest companies acquired by Facebook, which was founded by four ex-Google employees, helped track the activities of your friends on different social networks. It was like a real-time feed aggregator that consolidated updates from many social websites. FriendFeed was bought by Facebook for $15 million in cash and $32.5 million in stock in 2009. In addition to that, Facebook also managed to add ex-Googlers like Paul Buchheit to its team, who were responsible for creating Gmail. FriendFeed was closed down in April 2015.
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9. Face.com – $55-60 million in 2012
Another Israel-based technology company which Facebook bought was Face.com. The company was established in 2009 and specialized in mobile facial recognition. The company subsequently released the Photo Finder and Photo Tagger applications for Facebook. These features are crucial to encourage active conversation on Facebook, as you would want to react to a photograph you have been tagged in (of course the tagging feature is also heavily abused). Face.com was acquired by Facebook for an undisclosed sum estimated to be between $55 and $60 million in October 2012.
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8. Pebbles – $60 million in 2015
Pebbles is an Israel-based startup founded in 2010 and specializing in gesture control. To expand its presence in virtual reality, Facebook acquired Pebbles for $60 million. The potential of virtual reality has always excited users, since you can use your own hands instead of buttons, and essentially exist within a virtual world or space. Facebook also acquired Oculus in a much more publicized deal, which is another pioneer in virtual reality technology.
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7. Snaptu – $70 million in 2011
Next in line on our list of biggest companies acquired by Facebook is Snaptu that allowed users to access different social networks like Facebook, Twitter, Picasa etc. on any smartphone. As of September 2010, Snaptu had more than 30 free applications available from its own app store. After its acquisition by Facebook in 2011 for $70 million, Snaptu announced the discontinuation of all of its apps other than Facebook. At the end of 2011, Snaptu’s service ceased altogether. Today Facebook runs “Facebook Lite” based on Snaptu technology for low-end Android devices.
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6. Parse – $85 million in 2013
We are continuing our list of biggest companies acquired by Facebook with Parse that produced tools for mobile developers that helped them store data in the cloud and integrate other services. Facebook acquired the app-support software company in 2013 for a price tag of $85 million. Facebook said that the acquisition would enable developers to rapidly build apps for different mobile platforms. In January 2016, Facebook announced that it would close down Parse.
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5. Atlas Solutions – around $100 million in 2013
Facebook acquired the Atlas Suite from Microsoft Corporation (NASDAQ:MSFT) in 2013 in order to improve its ad measurement. The acquisition was thought to be beneficial for both marketers and users. Atlas would enable advertisers to perceive a group of interested people around the likes of Facebook for third-party apps and websites. Atlas still operates as a separate entity, having a presence in more than 24 markets globally. Founded in 2001, when these services were in a very nascent stage, Atlas Solutions provides online advertising solutions through a suite of tools to manage and measure the performance of advertising campaigns, and it is one of the biggest companies acquired by Facebook.
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4. Live Rail – $400-500 million in 2014
Next in line on our list of biggest companies acquired by Facebook is LiveRail, the video ad tech startup that was acquired by Facebook to increase the overall video advertising experience on its site, for a reported $400-500 million in 2014. It helped Facebook better target the video ads running in its News Feed. Facebook closed down LiveRail in 2016.
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3. Instagram – $1 billion in 2012
In order to gain a mobile foothold, Facebook acquired Instagram, one of the in April 2012. The deal came just prior to Facebook’s IPO in May 2012 and Zuckerberg was criticized by some skeptics for the exorbitant price it paid. Instagram was launched as a photo sharing social media app in October 2010. The acquisition is already bearing fruit, with Credit Suisse analysts estimating that Instagram delivered more than $3 billion in revenue in 2016. Since its acquisition by Facebook, the Instagram community base has grown from 80 million users in July 2012 to more than 500 million.
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2. Oculus – $2 billion in 2014
The virtual reality company is the creator of the Oculus Rift headset, an immersive gaming headset that has the power of transporting you to a whole new world. Eyeing future opportunities towards the next major computing platform, Facebook acquired Oculus in 2014 for a whopping $2 billion. Oculus has grown since then and is developing itself into a communications platform, wherein friends can share experiences. Oculus is expected to launch more VR content soon, including games, thrilling sci-fi experiences, and VR adventures.
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1. WhatsApp – $19 billion in 2014
WhatsApp ranks number one on our list of the 11 biggest companies acquired by Facebook, since the latter paid a jaw dropping sum of $19 billion for the landmark acquisition. Zuckerberg had long understood the importance of smartphones in peoples’ lives and that by taking over WhatsApp, Facebook could gain access to those mobile users. WhatsApp, which is the world’s biggest mobile messaging service, marks Facebook’s largest acquisition by far. WhatsApp reported having more than 1 billion users at the end of the third quarter of last year. From humble origins, WhatsApp has risen to be among the top social media apps in 2016.
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