How did Facebook become the world’s largest social media company?
Facebook was created in 2004 and has become the largest social media company in the world. Today, it owns four of the top five largest social media platforms in the world after splashing out on Whatsapp and Instagram.
Below is a list of the world’s largest social media platforms based on the number of active users in January 2021, according to Statista. Notably, most of the other names on this list spawn from China, where domestic firms have an advantage because Western internet companies are mostly banned.
- Facebook – 2.74 billion
- YouTube – 2.29 billion
- Whatsapp – 2.0 billion
- Facebook Messenger – 1.3 billion
- Instagram – 1.2 billion
- Weixin/WeChat – 1.2 billion
- TikTok – 689 million
- QQ – 617 million
- Douyin – 600 million
- Sina Weibo – 511 million
Alphabet-owned YouTube is the only serious competitor and its focus on videos puts it in a very different sector to Facebook’s social media platforms and messaging services. With this in mind, there is an argument that Facebook has a monopoly over social media in the West. There are competitors in the market, but they do not boast the user numbers or the power to attract the same level of marketing dollars as Facebook. For example, Snapchat has 498 million users while Twitter has less than 200 million monetizable users.
Notably, many of the businesses Facebook acquired, particularly in its earlier years, were closed with the talent and technology being integrated into Facebook, while some rival social media sites were bought and shut down.
A US Subcommittee of Antitrust report on Big Tech in 2019 argued Facebook’s platforms now competed more against themselves than external rivals, with Facebook Messenger competing with Whatsapp and Facebook competing for marketing dollars with Instagram. You can read more on how pressure is mounting on Facebook and other Big Tech, including on their M&A practices, here.
Although Facebook has continued to grow Whatsapp, Instagram and other companies it has bought over the years, it is yet to realise their full earnings potential. This is where shareholders hope future growth could come from as it monetises its other apps.
You can read our complete guide to find out everything you need to know about Facebook.
Facebook’s biggest acquisitions
Facebook has made at least 88 acquisitions since being founded, ranging from rival social media platforms, software companies, gaming outfits and consumer electronics experts to cyber security, ecommerce, lighting, artificial intelligence and machine learning companies.
Let’s have a look at some of the largest acquisitions that Facebook has made.
Facebook acquires Whatsapp
Facebook bought Whatsapp for $19 billion in cash and shares in 2014, making it one of the biggest tech acquisitions of all-time. Whatsapp was founded in 2009 by former Yahoo workers Jan Koum and Brian Acton and is an ad-free mobile app that allows people to send messages and make calls over the internet as an alternative to traditional services provided by mobile carriers.
The driving force behind the acquisition was Whatsapp’s growth. The app had 450 million monthly users when Facebook swooped in and was adding a staggering 1 million people each day. Today, over 2 billion people use the messaging service.
Facebook acquires Oculus VR
Facebook bought Oculus VR for $2 billion in 2014, paying $400 million in cash and another $1.6 billion in stock. Oculus makes virtual reality headsets and software used mainly for gaming and entertainment, along with optional accessories like controllers, and sells software like games and media through its digital stores.
Oculus was reported to have around 75,000 orders for its original headset, the Oculus Rift, at the time of the acquisition. It has since released new models and estimates from Statista suggest Oculus is the second largest VR company with 1.7 million units sold in 2019, behind Sony with 2.2 million and ahead of HTC at 800,000.
Notably, Facebook has acquired more gaming, VR and AR companies in recent years such as Ready at Dawn, Sanzaru Games, Scape Technologies, PlayGiga, and Beat Games all being bought since 2019.
Facebook acquires Instagram
Facebook bought Instagram in 2012 for $1 billion. The social media app has a niche that emphasises the sharing and consumption of photos and videos, with users able to take, edit and publish their own visual content. It was founded by Kevin Systrom and Mike Krieger, both of which stayed with the business under Facebook until 2018.
This was Facebook’s first major acquisition that allowed it to acquire tens of millions of users. Facebook has always vowed to keep Instagram independent of its core platform and stressed it wanted to tap into its expertise in photos. Today, Instagram has 1.2 billion users.
Notably, Facebook thought this would be its one and only major acquisition at the time. ‘This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all,’ Facebook said.
Facebook acquisition timeline
Below is a timeline that outlines all the companies that Facebook has acquired since being created in 2004, according to a report from the US Subcommittee of Antitrust.
2007: Facebook buys Parakey to make its first acquisition
Facebook purchased the domain AboutFace to ensure it didn’t cause any confusion, and made its first proper acquisition by buying Parakey, a platform that helped bridge the service between the internet and computers. Notably, Parakey was founded by the founders of the Mozilla Firefox browser and the transaction brought them in to help Facebook grow.
2009: Facebook buys ConnectU and FriendFeed
Facebook bought social media platforms ConnectU and FriendFeed to take out some of the competition and consolidate users. ConnectU was founded by Cameron Winklevoss and Tyler Winklevoss, who claimed Mark Zuckerberg stole their idea, and Facebook ended up buying the company as part of a peace deal. FriendFeed was a site that allowed people to have real-time feeds from multiple sites like blogs and social media sites but was shutdown in 2015.
2010: Facebook acquisitions accelerate
Acquisition activity started to pick up in 2010, when Facebook purchased eight businesses. These were data company Octazen, phot-sharing platform Divvyshot, Zenbe, search platform Chai Labs, recommendation site Nextstop, check-in app Hot Potato, file exchange service Drop.io, and private file sharing service Sharegrove. Most of them were regarded as acquisitions to secure key talent or tech, or to swallow up rivals.
2011: Facebook acquires Snaptu and 10 other businesses
Facebook made 11 acquisitions during 2011. These included Snaptu, which allowed people to use smart apps on simpler phones, advertising platform Rel8tion, and group messaging service Beluga. It also bought computer vision firm RecRec, software designer Sofa, analytics outfit DayTum, email firm MailRank, app publisher Push Pop Press, blogging site Friend.ly, app distributor Strobe, and location-based social network Gowalla.
2012: Facebook buys Instagram
Facebook made its biggest and boldest acquisition yet by buying Instagram. It also bought big data file transfer firm Caffeinated Mind, photo-sharing platform Lightbox, location-based social media app Glancee, loyalty reward startup Tagtile, facial recognition firm Face.com, mobile commerce firm Karma, iOS developer Acrylic Software, bookmarker Spool, and social media aggregator Threadsy.
2013: Facebook purchases Atlas Solutions and Parse
Facebook made 10 acquisitions in 2013. These were social media rival Storylane, programmer firm Osmeta, advertising company Atlas Solutions, mobile gaming firm Spaceport, digital product designer Hot Studio, B2B digital tool and service provider Parse, software tester Monoidics, translator service Jibbigo, data analytics firm Onavo, and SportStream, which analyses sports chatter on social media sites.
2014: Facebook buys Whatsapp and Oculus VR
This was and still is the biggest year on record for acquisitions because of the huge price tag of Whatsapp, as well as the $2 billion purchase of Oculus VR. It also bought mobile app performance monitoring firm Little Eye Labs, link-sharing service Branch, drone maker Ascenta, activity tracker ProtoGeo, video advertising technology outfit LiveRail, cyber security business PrivateCore, mobile data firm Pryte, and audio production company WaveGroup.
2015: Facebook bolsters Oculus with VR deals
Facebook purchased six companies in 2015, having taken its foot off the gas after spending big the previous year. The company purchased speech recognition service Wit.ai, video infrastructure provider QuickFire Networks, shopping search site TheFind, remote network provider Endaga, and VR companies Surreal Vision and Pebbles Interfaces.
2016: Facebook purchases Masquerade and CrowdTangle
Facebook bought six companies in 2016. These were selfie filter firm Masquerade, VR audio company Two Big Ears, physical gadget software designer Nascent Objects, LED lighting firm InfiniLED, emotion detection software maker FacioMetrics, and tracking tool CrowdTangle.
2017: Facebook buys Zurich Eye and tbh
Facebook purchased five companies in 2017. These were VR outfit Zurich Eye, AI firm Ozlo, copyright protector Source3, computer vision firm Fayteq, and teen social media platform tbh.
2018: Facebook acquires Bloomsbury AI and Vidpresso
Facebook bought just four companies in 2018 – identity verification software designer Confirm.io, language processor Bloomsbury AI, communication tool developer Redkix, and live streaming experts Vidpresso.
2019: Facebook buys CTRL Labs
Facebook acquired seven companies in 2019. These were blockchain company Chainspace, chatbot Servicefriend, visual search shopper GrokStyle, video-shopping startup Pacakgd, VR game maker Beat Games, cloud video-gaming firm PlayGiga, and CTRL Labs, which is working on tech that allows people to control computers with their brains.
2020: Facebook snaps-up Giphy
Facebook added five more businesses to its list in 2020, acquiring mapping company Mapillary, animated picture platform Giphy, and VR video game makers Sanzaru Games and Ready at Dawn.
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