Facebook plans acquisitions

24 August 2011

PALO ALTO: Facebook, the social network, is seeking to expand its capabilities through buying companies in a variety of areas, such as mobile communications and software design.

Speaking with Bloomberg, Vaughan Smith, Facebook's director of corporate development, said it hopes to make 20 acquisitions in 2011, having completed 13 over the year to date.

In demonstration of the firm's growing ambition, this year's total already marks an improvement from ten purchases made in 2010, and only one in 2009.

Smith said: "Two years ago we didn't have a track record in acquisitions. While we expected them to work well, it was still a crapshoot how they'd turn out. We've built a culture that supports entrepreneurs, and it's working incredibly well."

The impetus to invest may partially result from competition with Twitter and Google, which recently took over Motorola Mobility, and attracted 29m users to its social network, Google+, by the end of July, per comScore.

Debra Aho Williamson, an analyst at eMarketer, said: "Facebook is just trying to get the smartest people possible in any way it can. The idea of bringing in new talent, smart talent, people who have created interesting products that Facebook can capitalise on, is going to be important to them."

One goal is to ensure its pages remain easy-to-use despite the increasing range of tools available, as shown by Facebook's purchase of Sofa, a software design specialist, and Push Pop Press, providing publishing solutions for devices like tablets.

Josh Bernoff, an analyst at Forrester, said: "The challenge is that Facebook does a lot more things than it used to. To get that all to be easily navigable is not simple."

Mobile constitutes another potentially important category, and Facebook now owns both Snaptu, which had developed social networking apps for feature phones, and Beluga, a one-to-many wireless messaging service.

Lou Kerner, an analyst at Wedbush Securities, said: "The future of all computing is mobile. Mobile, I think, is the top priority at the company."

Facebook has 750m members around the world, meaning infrastructural issues must also be addressed, suggesting technology start-ups and teams with expertise in this field might be particularly appealing.

Jeremiah Owyang, an analyst at Altimeter Group, said: "They have to over-plan for massive growth."

Data sourced from Bloomberg; additional content by Warc staff