In the highly competitive tech industry, there are two ways to get ahead of the rest of the market when it comes to acquisitions.
Some companies are better at identifying the startups who are working on products and systems which can make their business more cost-effective and whose employees would be a valuable addition to their ranks, while others seem more interested in acquiring entire brands wholesale that have already found some success.
In the case of tech giants like Amazon and Apple, whose respective purchases of Chinese online seller Joyo.com and voice-activated app Siri gained them new insights into different markets and burgeoning technologies, the former route has already paid off; while some of the larger buys by other companies have served only to eliminate the competition and open up larger avenues of potential income in the future. Here we examine what three of the world’s biggest online brands have done to solidify their position.
According to TechCrunch, Facebook founder Mark Zuckerberg had made several offers to purchase the new chat app on the block, Snapchat. When each increasing offer was rebuffed, he oversaw the next best thing: the $19 billion acquisition of WhatsApp. Facebook’s short-lived Poke app was in many ways a blatant copy of Snapchat but its appeal was not enough to stop the massive growth of the independent app. As Facebook attempts to spin off several mobile apps (meaning more places in which to eventually place ads) the financial opportunities are clear — but their other big acquisition in recent years was Instagram, another app which Facebook saw as a threat for which they paid a relatively much smaller billion dollars. The ability to spend $20 billion on just two companies shows Facebook’s keenness to corner the market in sharing stories and communicating with friends, but it remains to be seen just how this will work out.
When Silicon Valley search giant Google bought Motorola Mobility for $12.5bn in 2012, their aim was to widen the availability of their search tools to an audience growing away from the usual desktop computer. Manufacturing their own handsets would give them the ability to standardise Android as an operating system of their own rather than sharing with other hardware manufacturers, as well as to secure what was left of the ‘grey area’ around patent disputes which most recently saw them lose a patent case against SimpleAir — the damages are initially thought to be as much as $85 million. However, it’s since been reported that Google are selling on their new phones division to Lenovo for just under $3 billion — a massive loss on their initial investment.
Yet Another Hierarchical Officious Oracle was formed a full decade before Facebook and four years before Google; even before the millennium the company was swimming in enough capital to make two massive acquisitions to make quick advances into new markets.
In January 1999 Yahoo! confirmed their purchase of GeoCities, which was at the time the third-most-visited site on the fledgling World Wide Web behind only their new owners and search rivals AOL. Bought for $3.6bn, GeoCities was unique in that it allowed users to set up their own Web pages — no matter what their level of online ability — and placed them in fictional ‘cities’ according to interest. If you wanted to know the latest celeb gossip you’d visit the ‘Hollywood’ section, while ‘Area 51’ was the place to go for lofty sci-fi conjecture and conspiracy theories. Six months later, Yahoo! announced new ownership of Broadcast.com for a touch over $5 billion — the site was already well-known for its audio and video streaming services which their new owners wanted a piece of as homes in the US and around the world began to receive sturdier internet connections with which to easily access this content.
As time drew on and other online powers began to emerge, Yahoo! did not advance as smoothly as early indications may have suggested — both purchases have to an extent been shuttered as Yahoo! focuses on its latest buy, Tumblr. Will this prove to be the turning point for the first giants of Silicon Valley?
|Most Expensive Acquisitions|
|Acquiring Company||Target Company||Acquisition Price||Year|
|Kiva Systems||$775 million||2012|
|Apple||Beats Electronics||$3 billion||2014|
|Oculus VR||$2 billion||2014|
|Motorola Mobility||$12.5 billion||2011|
|Nest Labs, Inc||$3.2 billion||2014|
|Overture Services, Inc.||$1.6 billion||2003|
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