Facebook Steps Up To The Plate

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

It’s the first thing you learn in public relations school – don’t let two headlines of this type surface on the same day:

  1. “Facebook, Google to Face New Antitrust Suits in U.S.”
  2. “Facebook confirms it has acquired Kustomer, sources say for $1B”

But, such is life for Zuckerberg’s outfit.

Digging Into The Details

Founded in 2015, Kustomer is a customer relationship management platform that specializes in “omni-channel” relations and chatbots.

In plain English – Kustomer compiles customer communications from many disparate sources (social media, chatbots, email) in one central location. As the name implies, it is focused on improving customer engagement by providing a holistic view of data and inquiries.

Facebook’s acquisition of Kustomer is actually an expansion of an existing relationship – Kustomer users can already respond to customer inquiries that come through Facebook Messenger and the company also recently began integrating with Facebook’s Instagram messaging.

The Big Picture: In the acquisition press release, Facebook said customer chats are surging in prevalence and every day more than 175 million people reach out to businesses using its WhatsApp messaging service.

Why It Matters

For Facebook: The deal is one of the largest-ever initiatives to offer solutions to companies that use Facebook as the “face” of their business. It is a deeper push into the world of “social commerce” where users make purchase decisions directly on the social media platform.

  • In May, the company launched Facebook Shops, which lets businesses create online stores through Facebook and Instagram.

Tools such as Kustomer will further entrench Facebook’s business users and allow Facebook to diversify away from advertising revenue, currently the lion’s share of its financial profile.

For Regulators: The deal is sure to raise eyebrows. The last $1 billion acquisition Facebook made was its purchase of Instagram. Within Facebook, Instagram is reportedly worth over $100 billion and many regulators say the company should be forced to divest the app.

The Takeaway: Earlier this month, rival Snap acquired Voca.ai, which makes customer support voice bots. Great minds think alike, or something like that.