Social Media and the Ever Expanding Dollar
It's well known by now that the "vanishing" picture and video platform known as "Snapchat" was made a buyout offer from Facebook for $3 Billion (That's Billion with a "B"). It's been rumored that Google may have even made an offer for $4 Billion.This wouldn't be the first time that large tech companies, Facebook included, have bought out their competition. It seems to be easier for the powerhouses, in many cases, to buy out their competition rather than trying to compete with them. This eliminates two birds with one stone - By adding the competitors services to their own portfolio and eliminating the competitor.
The reason Facebook was so interested in Snapchat is because they found that recent data was showing a wane in Facebook's teenage users. For whatever reason, whether kids didn't like that their parents were on the platform, that they couldn't escape the prying eyes of their peers or that it just wasn't "cool" anymore, teens just weren't using Facebook as much as they were in the past.
Enter Snapchat. A mobile platform where you can either take a picture or record a video, and set a time (from 1 to 10 seconds). Once that image is viewed and the time you set expires, the video/photo is deleted forever. Teens loved that they could say and do what they wanted and not have to worry about it showing up somewhere else. Facebook attempted to recreate this exact same thing with a short lived app called "Poke" which was essentially the same thing, but it could never get off the ground and quickly failed.
In 2012 Facebook did much the same thing it planned to do with Snapchat, to Instagram. Instagram at the time was a fledgling photo sharing/filter company and was only a year old when Facebook bought them out for $1 Billion.While the practice of buying out your competitors isn't new, what was quite shocking to the world is that a start up company (Snapchat) that had been created only 2 years prior was receiving a buyout proposition for 3 billion dollars... and they refused it.
TwitBits on Facebook Snapchat Buyout Offer
No one is still 100% sure on why they refused it, but some speculations include that the founders/creators were told by an investment firm that their app was worth more than that, while others say that they wanted to stand up for themselves and show that the "big players" couldn't just buy out whomever opposed them. Whichever the correct answer is, many were shocked.
What are your feelings on this? Do you think Snapchat should have taken the offer? Why or why not? What does this say (positive or negative) about some of the big names such as Facebook and Google that are looking to buy out their competition? Do you think this practice is becoming (or has already become) the norm?
Refusing a deal for $3 billion is probably not a good business decision. Truly, I think Snapchat should have taken the offer. I knew the application was growing among my peers in the summer (2013). However, the hype has died down; less people are using the application than expected. Facebook and Goole purchase a lot of start up type of companies. They even purchase companies larger, such as Snapchat. In my opinion, buying out competition is needed. I go by the term "It's a dog eat dog world." If Google sits back and lets Facebook acquire a new trending application, than Google would fall to the pray. This is the reason why companies like Google have survived in the ever-growing Internet. And yes, this practice has become the "norm" of the big players online. Companies like Yahoo, LinkedIn, Zynga, ect. It is now a normal practice.
ReplyDeleteCheck the following article out. http://piersmorgan.blogs.cnn.com/2014/02/19/gayle-king-on-social-media-and-loneliness-no-ones-going-to-send-you-a-picture-of-laying-in-the-bed-in-the-fetal-position/?iref=allsearch - This explains some interesting points on social media in today's society. "...no ones going to send you a picture of...laying in the bed in the felal position..." stated in the article. The article explains how many can feel that they have many friends, but still feel alone. Information discussed this week, such as the Google Plus or YouTube, allowing for more face-time interaction with peers. Beyond typing in a "status" or update or "tweet." Sending out information as a video or Google Plus Hangout for more face-to-face interactions.
ReplyDeleteI admire Snapchat for turning down $3 Billion. There had to have been a good reason as to why they did it. Whether it be from the reasons Jake posted or just for simply wanting to carry on under their own entity, there just had to have been a solid reason. Think of it this way, between the traditional media conglomerates that are pretty much borderline monopolizing their assets and the social media giants such as Facebook and Google trying to monopolize it is a bit refreshing for Snapchat to go on about their own business.
ReplyDeleteAll I can picture when thinking about that large of an offer is Dr.Evil and his maniacal laugh. I wish Snapshot the best of luck and future success, however I would have taken the offer. It is refreshing though to see a company turn down a ridiculous buy out attempt. Sometimes it is a little scary how powerful Google and Facebook have become.
ReplyDeleteIf Snapchat had a real passion for their app and what they were doing, then yes, turn it down and keep doing what they love. If it was because they thought they could get more money, then no, 3 BILLION dollars is a crazy amount of money and I would have taken it. You can never be sure of another offer coming, so in my opinion, it would have been wise to take the offer and move on to another project.
ReplyDeleteI am not surprised Facebook made this offer, and would expect them and other big names, like Google, to continue this practice in the future. It is in their best interest to buy up and eliminate any competition, just like in regular business. This is why Facebook and Google have continued to be the leaders in social media in an ever-changing online environment. I think these types of moves are a positive thing for their company and stakeholders. Like we heard in the guest speaker video, companies have to keep up and keep changing with the times and this even includes the large companies that we are all trying to keep up with.
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ReplyDeleteIn response to this article about Snapchat refusing a buyout deal for 3 billion - I'm surprised, but then again, I'm not. On one hand, 3 billion is so much money - that to turn it down, you'd think the person would have to be crazy. BUT, by turning Facebook down, they've only made themselves more appealing, not only to Facebook but to other corporations and companies who may be interested in investing or buying in the future. This way, they could end up with an entirely new deal worth more money than the already incredible 3 billion! It's a smart business move, but also a risky one because they don't know if another company will come along to offer them more money. Also something people rarely think about is maybe they just didn't want to sell Snapchat. That's always a possibility.
ReplyDeleteI recently read an article on CNN.com about how Facebook has changed the American dialect in ways we would have never imagined when it was created. The article cited 9 different words and phrases that have taken on a whole new meaning since Facebook took off. Some of these include “Like,” “Tag,” “It’s complicated,” and “Friend.” If you really think about it, these are all extremely true. You hear people say, “Well, are they your friend or are they your Facebook friend?” The phrase “friending” someone wouldn’t have really made sense before 2003. Facebook has also changed the meaning of “It’s complicated,” which many people cite as the most annoying thing the program allows you to do. Even so – people are still talking about it.
This links in with what the guest speakers from Autoweek were talking about when they were discussing how much influence social media has in the news these days. It’s true that you can scroll through your Twitter or Facebook feed and find out about large news events quicker than if you casually scrolled through a news website at your leisure. This ties in with the article about Facebook lingo because it shows how much influence these platforms have on our lives. Not only do they inform us about the most recent news before news programs can get to us – but they’re changing the way we communicate and speak.
Check out the CNN article here: http://www.cnn.com/2014/02/02/tech/social-media/facebook-words/
Sure, they could have taken the money, but for some it's more than the money. Maybe they take great pride in the fact they started this company and they want to continue to be the face behind the company. It seems their reasoning for accepting or not accepting these offers is unknown anyways. As far as the competitors who want to buy out snapchat, maybe they should invest that money in hiring creative employees. All it takes is one crazy idea that might work. After all, that's how most random apps have become so popular .
ReplyDeleteSnapchat seems to have bigger plans in mind. They're continuing to grow, according to this CNET article. Being bought out might actually be a bad decision for them.
Deletehttp://news.cnet.com/8301-1023_3-57619130-93/the-not-so-secret-appeal-of-snapchats-fleeting-stories/
I think Snapchat realizes that they have Facebook worried maybe since they couldn't get their version of this to work. Maybe Facebook thought they could buy out Snapchat and get the rights to the code for this platform. I'm pretty sure I would have taken the money though. 3 Billion Is a lot of money or 4 for that matter. I think these bigger names are making so much money that they can offer these other companies any offer of money. I don't think it's right that they are so easily worried about smaller businesses that they don't let them thrive for a while. I don't know anything about Snap chat but I do think it is becoming more and more normal for Facebook to buyout its competitors.
ReplyDeleteThe fact that Facebook wanted to buy SnapChat for $4 billion is nothing compared to what they did just buy. Facebook has bought out the app "WhatsApp" for $19 billion! Some are calling Facebook crazy while others say when you break it down it was a very smart move. It is clear to see that Facebook is building their empire and wanting all the best/ most popular apps. But why is this? I can't help but think it is because of wanting to have something they can fall back on in case Facebook starts to die out...This could be completely wrong and I think Facebook will always have some of a presence but it is a theory
ReplyDeleteTo read more about the $19 billion deal go here: http://mashable.com/2014/02/21/facebook-whatsapp-crazy/
For a little more information on WhatsApp here is another article: http://mashable.com/2014/02/21/whatsapp-user-chart/
I think it's a good move not to take the offer. To many companies are going around buying up other companys that they view as a threat and they think that by buying them up that they can take them over or add them to their own portfolio of companies they have purchased.
ReplyDeleteIn recent news, I also believe that Facebook was looking buying the popular app called What's App. this allows people to chat, send video, short voice memos, and images around the world without having to worry about expensive fees that you would normally pay if you wanted to text on your phone.
To be fair bigger companies have been buying smaller companies for years that that is something that will never change.
Snapchat had their reasons for not accepting the buyout agreement whether it was to take a stand against the big players and not become a part of some social media monopoly or to hold out for a larger offer. Time will tell. Good for them to not fall for the first one or two offers. Maybe their criterion for valuation of the company includes more than just money. Perhaps they have principles? If they are happy with their decision, than it was the right one.
ReplyDeleteAs for the bigger players, this may put them on notice the same way they put their predecessors on notice not that long ago. In dog years they may still be young but in internet years they are pushing 100. As for the norm, I think it changes every day. Practices that seem normal or commonplace today in buyout offers may soon seem quaint.
One of the aspects of social media that everyone seems to agree on is its similarity to the weather. As people in some parts of the country have noted, “If you don’t like the weather, wait a few minutes ‘cuz it will be changin’.” Ditto for social media.
The fast clip of the evolution of social media is reinforced with the news of a possible Snapchat successor by the name of Wickr. Wickr has come out strong in the past few weeks with promises of an app that is far superior to Snapchat. Wickr, created by professional cryptologists, is an app that also has self-destructing messages. The main difference is they do not care who their users are and do not maintain private information from their users. This will eliminate some of the hacking issues Snapchat has experienced.
Wickr’s impact on international social media is yet to be seen as the stronger encryption model has a wide international appeal. Use of this app will allow people to feel more trust with social media and may encourage some new users.
According to a lecture I watched this week from the Editor and Social Media Manager at Autoweek, companies need to try new social media platforms and apps and measure the results with a goal in mind. At that point they can determine whether or not they should implement them. The same can be said for individual users when utilizing Wickr or Snapchat.
After learning about this discussion, it has given me a better perceptive on making wise choices about money. After reading an article about fundraising for charities on cnn.com, this topic has opened my horizon for the future.
ReplyDeleteAccording to CNN.com a dozen big time organizations have give 40 million dollars to Guatemala. These funds were suppose to help out for the less fortunate. Ending up it was a fraud to pay things illegal and not necessary.
Snapchat has been negative because of one the growth of other social media outlets. Another reason, is Google and Facebook growth has added more things than what Snapchat has to offer. Finally, Google Plus is the next social media tool to have in the coming years for sure..
Here is this article on CNN.com :
http://ac360.blogs.cnn.com/2014/02/11/keeping-them-honest-what-happened-to-40-million-in-charitable-donations/?hpt=ac_mid
It doesn’t financially make sense as to why SnapChat didn’t take the buyout from Facebook. It seems as if Facebook is offering them much more than they can make in any given year. It may be a situation where the makers of SnapChat want to be able to brag and say that Google and Facebook offered them billions and they turned it down. I believe that eventually SnapChat will lose its’ popularity like most apps do and the creators will regret not taking the offer when they had the chance.
ReplyDeleteI think that SnapChat should have taken the offer that Facebook made. I think that Snapchat has reached it peak and will slowly become less and less popular as time goes on. Even the app like Instagram has very similiar capabilities as SnapChat does. Unless SnapChat has something they are hiding and waiting to reveal I think they made a poor choice. It does have a great feature that makes is possible to instant message picture with text. But it needs to become more sophisticated before that technology really adapts and takes over text messaging. Caitlin McGarry states, "Snapchat is unique, but the app makes no money, and it doesn’t have many users compared with other popular services that skyrocketed to success and then sold out to larger companies"
ReplyDeletehttp://www.techhive.com/article/2068302/why-snapchat-will-never-be-worth-3-billion.html
Personally, I am glad that snapchat did not take the offer from Facebook. I think that there are too many companies out there that are very greedy and only want to buy out companies so they can make the profit out of it. By offering this much money to buy out snapchat, I think that it is showing how Facebook is just trying to monopolize the social media world. I believe that they practice of buying out other companies and monopolizing has most definitely already become a norm, because almost any app that becomes popular is always trying to be bought out by a bigger company.
ReplyDeleteFor some it's more than money. An example of this is the ongoing battle between Verizon and Netflix. Verizon has refused to pay the higher prices to Netflix for faster service. They may lose a lot of business over the decision but they are taking a stand. It will be interesting to watch this battle play out over the coming months to see which side is impacted more by the decision.
ReplyDeletehttp://arstechnica.com/information-technology/2014/02/netflix-packets-being-dropped-every-day-because-verizon-wants-more-money/
For Snapchat to turn down such an offer says a lot about the app itself. First of all, it amazes me how much money facebook is willing to throw out there to eliminate its competition, remember the game monopoly. Facebook has become such the force in social media that it's making billionaires of many people involved in the industry whether related to facebook or not. Should snapchat have taken it... I say yes but apparently someone that knows more than me said no. Obviously they feel they have something that can eventually fetch them more than $3 billion at some point. It happens in many industries however, a major example would be Comcast and Time Warner Cable exploring a merger, as Comcast attempts to take over it's biggest competitor for $45.2 billion... $45.2 billion... It seems like a lot to get rid of your main competitor but many in big business feel throwing billions around in such fashion will pay off and obviously it must.
ReplyDeletehttp://www.reuters.com/article/2014/02/13/us-comcast-timewarnercable-idUSBREA1C05A20140213
I believe they turned down the offer because they believe in their product/app. They must believe that their app will net them far more then the 3million offered by Facebook. In business sometimes if you feel that strong about something you have to take a chance and see how far you can go.
ReplyDeleteThat is a lot of money to refuse, but good for Snapchat for sticking to their guns and not selling out to the big guys. I think it shows that they really believe in their product and that not everything has to boil down to how much they can make. I know that my girls post very little on Facebook and use Snapchat often. I never new what poking was about on Facebook and I've yet to experiment with Snapchat.
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