Facebook, Google push deals despite antitrust scrutiny
Facebook announced Monday that it has purchased a customer service chatbot startup called Kustomer. The app reportedly cost Facebook $1 billion, the same amount it paid for Instagram in 2012.
Why it matters: The deal is the latest sign that the world's biggest tech companies, despite facing enormous antitrust scrutiny globally, will not stop buying up other companies.
- Google is awaiting approval for its acquisition of health fitness company Fitbit for $2.1 billion.
- Facebook said it would acquire Giphy for $400 million in May.
The antitrust pressure is increasing as both companies continue to grow during the pandemic.
- The Justice Department and 11 states filed a major antitrust case against Google in October, accusing the company of using anticompetitive practices to bolster its position in the online search market, and the Federal Trade Commission is reportedly near bringing an antitrust case against Facebook.
Be smart: For both Google and Facebook, recent acquisitions aim to bolster new businesses, like e-commerce, connected fitness and gaming.
- Facebook earlier this year launched Facebook Shops, its most aggressive push yet into e-commerce. It also added a dedicating shopping tab to its main app in August, and more recently added a shopping tab to Instagram as well.
- Google's expansion beyond search includes new bets on areas like hardware and wearable technology.
The bottom line: It's harder for regulators to prove that companies like Facebook and Google hold monopolies when they are new entrants in a market, so the companies' acquisitions in newer lines of business may not set off alarms.
Yes, but: Companies this size gain market power quickly.
- Facebook says that, already, 200 million businesses worldwide use its free tools.
- In its announcement today, it said that more than 175 million people contact businesses via WhatsApp, the global messaging service it acquired in 2014.