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Facebook Cuts Back on Its Startup Acquisitions in 2019

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Facebook’s (FB) acquisition of startups has decelerated significantly. Facebook has bought only two startups so far in 2019, according to Crunchbase data. In contrast, Facebook acquired four startups in the first half of 2018 and bought six startups in 2018.

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Facebook acquires Servicefriend to strengthen its Calibra subsidiary

Facebook’s latest acquisition is Servicefriend, a deal that disclosed this past Sunday. Servicefriend is an Israel-based startup that develops chatbots for customer service. According to a TechCrunch report, the Servicefriend team has joined Facebook’s Calibra financial services unit.

Facebook unveiled Calibra in June as a subsidiary through which it plans to provide financial services around its Libra cryptocurrency. Facebook hopes that Libra and Calibra can supercharge its core advertising business. Additionally, the company is counting on Calibra to help it generate nonadvertising revenue.

Facebook relies heavily on advertising for the majority of its revenue. However, the company wants to diversify its revenue sources outside the advertising market. The Libra project has run into regulatory resistance around the world, threatening the company’s plans for Calibra.

Facebook’s acquisitions slow down amid mounting regulatory scrutiny

Facebook’s acquisition slowdown comes as the company faces increasing regulatory scrutiny. The company is currently under antitrust investigations by several states as well as the FTC (Federal Trade Commission) and the Department of Justice.

The Wall Street Journal reported on August 1 that the FTC is looking into Facebook’s acquisition practices as part of its antitrust probe. According to the report, the FTC wants to discover whether Facebook purchases potential rivals to neutralize the competition.

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Facebook’s impactful startup purchases

Among Facebook’s acquisitions that have gone on to make a substantial global impact include Instagram and WhatsApp. Facebook acquired Instagram for $1.0 billion in 2012. Instagram only had 30 million users at that time.

Instagram currently has more than 500 million daily users and 1 billion monthly users. That makes Instagram larger than Snapchat, Twitter, and Pinterest. Additionally, Instagram has attracted millions of advertisers.

WhatsApp had about 460 million monthly users at the time Facebook acquired it for $19 billion in 2014. WhatsApp currently has over 1.5 billion users.

The slowdown in Facebook’s acquisition program also comes as the company is investing significantly to expand its infrastructure. Facebook is developing its first Asian data center in Singapore and plans to spend over $1 billion on that project. Moreover, Facebook plans to build an undersea cable ring around Africa in a project that could cost over $1 billion.

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