People are definitely shaking their heads about the recent spending spree that Facebook has been going on. Instagram. WhatsApp. Oculus Rift. It’s a spate of purchases where everybody is wondering what Facebook could possibly have on its mind. Between the three purchases, $23 billion has been spent.
It’s not just the consumers wondering about the motivation that Facebook has had behind these purchases. The specialists in the field are also wondering what the heck Facebook has in mind by taking on purchases of this magnitude. However, there is a certain method to Facebook’s madness. WhatsApp, for instance, will tap into a user base of a billion people in developing nations, thanks to its tie to mobile phone numbers. Facebook could also be catapulted into the gaming industry thanks to Oculus Rift and its virtual reality experience. The speculation about the Instagram purchase was fairly tame, by comparison; it was believed that Facebook had paid just a billion dollars to improve its photo sharing.
However, what is more on point is that Facebook is now a conglomerate instead of being a simple social media business. Facebook is the world’s largest social network, but in reality, the company doesn’t need any of them to be more successful than it is already. However, as a corporation, they come in handy, as conglomerates are multiple corporations, combined.
As far as technology-drive corporations go, Apple and Google don’t really play that game. In general, technological giants like Apple and Google are wanting to disassemble the smaller companies and incorporate them as a part of the larger whole.
Facebook is playing it safe. They have bought companies that are, by all accounts, on a winning streak, and have told them to keep doing what they are doing. However, there are concerns that there will now be designs where Facebook will now ramp WhatsApp up by inundating it with tons of ads, or that the virtual reality worlds that are potential as a result of Oculus Rift will become a regular part of FarmVille or Candy Crush.
Facebook CEO Mark Zuckerberg has realized that not everyone is a Facebook fan. Zuckerberg’s move to pick up anything that can help support Facebook as a conglomerate helps restore faith and credibility in Facebook the business instead of Facebook the social media site.
Therefore, some of Facebook’s recent purchases have made sense; Instagram was a solid rival of the social media site and so, its purchase was all about bringing Instagram into the Facebook fold. WhatsApp help Facebook naturally increase its broader appeal, and Oculus Rift can change the face of gaming as a whole. In fact, Facebook was likely ticked that Google beat it to the punch on the Nest purchase, but with the immediate benefits that WhatsApp would offer Facebook, it made more sense to purchase WhatsApp. In the same vein, purchases like Spotify and Tesla may very well also be in Facebook’s future.
Facebook wants to demonstrate that it is mature and that it is ready to play in the big leagues. It’s moving faster than any other tech company, and no doubt, every purchase will lead to the same question: Why? The bottom line is, the why doesn’t matter; the point is that Facebook is looking to distance itself from its image as a neophyte social media company to a company that is ready to run with the big dogs.