After having written about curious-, copying-, art- and franchising online business ideas as well as about how to find an online business idea, I finally come to an end by adding a post about online acquisitions. Acquisitions occur when one company buys another one and in fact, this happens a lot in case of online ventures. Google for example, since its foundation in 1998, has acquired the astonishing number of 98 companies and yet there is no end in sight.
But why is it worth doing and who profits? Will there be only one firm left in the future that rules the entire vastness of the internet?
Taking a look at the most recent acquisitions Google took over Admeld to improve their already existing advertising mediums and increase revenues. However Jay Yarow states in his blog that the acquisition is a big mistake as
“they will attract more anti-competitive attention as this deal is worth.”
Actually this deal was $400 million worth for Google. So why taking the risk? Well, Admeld hopes to advance their display advertising technology which they can now implement in all the Google platforms plus count on Google investments. However, if the deal does not turn out to be positive for Google, they might let the brand Admeld vanish. In this case the acquisition was performed to obtain technology and to implement it into the already existing, nowadays a very common strategy to improve a business and let it grow, especially if firms protect their technology with patents.
In march 2011 Facebook (15) bought Beluga for an unknown sum. MG Siegler describes in his article the deal as “interesting,” because all their previous takeovers where made to gain just the talents of other firms and not the technology. Beluga is a group messaging app and Facebook kept the brand alive, but unfortunately it became unreliable and Facebook hasn’t published any plans for improvements. As you can see, takeovers are also done to pilot talented workers to the company. Of course, you want innovations, you need creative and reliable brains.
“one of the hottest technology segments.”
Bearing that in mind I read in a couple of blogs (e.g. hoffingtonpost, NYTimes) that this was a strategy to keep Skype away from e.g. Google or Cisco and to enter the internet telephone industry. In a fast growing industry time for innovations is quite rare, to keep up with the competitors acquisitions are essential to retain a reasonable market share, increase revenues and simultaneously investments.
George Orwell’s 1984!?
Acquisitions definitely bear risks and not always both sides profit e.g. Beluga didn’t profit from Facebook. On the other hand it is a chance for companies to improve and grow. Google or Facebook started once as a small business and are now huge, multinational and powerful firms that swallow more and more of the internet. However, the internet will never be controlled by only one company as monopolies are forbidden by law. So don’t be scared of an Internet-Dictatorship! Nevertheless many people believe that just a few businesses will run the world wide web in the future and many bloggers like Kashmir Hill predict a battle between Google and Facebook!
Till then, happy arms race!