How Facebook grew through mergers and acquisitions

It’s official! Giphy, the startup that first started as a search engine for GIFs, has joined the ranks of innovative companies across the globe that were acquired by Facebook, just at the time when these organizations’ new technologies had begun to take the world by storm.

“Facebook has acquired Giphy, one of the largest GIF animation libraries, reportedly for a whopping $400 million. The social networking giant plans to integrate Giphy’s database with Instagram and other apps in the coming days,” reported The Windows Club.

It is developments like this that make Facebook’s journey to become among the most valuable companies in the world to be as much about farsighted acquisitions as it is about technology that shapes the future. Each of these companies that Facebook acquired had demonstrated the potential to grow far bigger than Facebook. Let us look at some of these famous brands.

The five most forward-looking acquisitions by Facebook

WhatsApp: Owning the most-used messaging and calling service on Earth
Facebook’s most expensive and possibly high-profile acquisition ever remains its purchase of WhatsApp. The world’s most popular messenger and calling service today, WhatsApp was initially launched as a low-cost alternative to text messaging in 2009. At the time when Facebook acquired it about five years later, WhatsApp had 400 million active monthly users, and showed every indication of outpacing Facebook. While Facebook acquired WhatsApp for an incredible price of $19 billion in cash and stock at that time, the investment has clearly paid off. Today, with two billion users globally, WhatsApp is the primary means of electronic communication in several countries and is expected to generate revenue worth $5 billion by 2020. 

Instagram: Building the platform where the world shares pictures
Anotherequally prominent purchase was Facebook’s acquisition of Instagram in 2012. Launched as a photo and video-sharing social networking platform in 2010, Instagram had one million registered users in just two months and 10 billion in its first year.Yet, while it did have the potential to emerge as a rival platform to Facebook, at the time of its acquisition for $1 billion, Instagram was generating no revenue. Both this, and Facebook’s decision to develop the Instagram app independently from the Facebook platform, proved to be a wise decision. In 2019, Instagram hit one billion registered users and is reported to make higher advertising revenue than even its parent company. 

Oculus VR: Entering a virtual universe
With this acquisition for $2 billion in stock and cash in 2014, Facebook also made its way into the world of virtual reality and gaming. While the company has not achieved the stupendous success of Facebook’s other acquisitions, among gamers it is best known for its Oculus Rift product, a virtual reality headset designed for video gaming. This headset was only a prototype when Facebook purchased the company. But Oculus VR instantly gained visibility in the market as Facebook company.Since then, the company has partnered with Samsung to make Samsung Gear VR. It has the ambitious goal of reaching one billion VR users.

Onavo: Discovering mobile web analytics
Facebook bought this mobile analytics company in 2013 for an undisclosed sum of money. While it was acknowledged that this was not among Facebook’s largest acquisitions or even its most successful in terms of revenue generated, Onavo’s technology has certainly had great implications for Facebook. In fact, it is reported that the Onavo Insights mobile analytics platform is used to track the performance of both competitors and high-performance startups. Most importantly, it is believed to have influenced Facebook’s acquisition of WhatsApp and the expansion of its video business.

Beluga: Becoming Facebook Messenger
Like with Onavo, Facebook’s purchase of Beluga in 2011 was a small acquisition for an undisclosed sum of money. But once again, it was the technology transfer that accompanied the acquisition that was far more significant. With Beluga came the technology that would integrate and evolve into the hugely popular Facebook Messenger. And with this, Facebook once more also defused and even neutralized a dangerous rivalry.

Together, these are just five out of 84 acquisitions that have been part of Facebook’s journey to become a global giant with 2.5 billion users and a market capital of $479.2 billion. Its acquisitions have brought new products into the fold and have also played a key role in diversifying and enhancing Facebook’s revenue streams. But most importantly, Facebook’s CEO Mark Zuckerberg has described these as “talent acquisitions.” As he famously said, “We have not once bought a company for the company. We buy companies to get excellent people.” Where it is possible and beneficial, as we have, Facebook has nurtured new products as separate platforms. Otherwise, it has reimagined these products, integrating these as powerful new features into the Facebook platform. Together these acquisitions have become a part of the diverse range of its offerings, driving Facebook’s growth story.