November 15, 2013

Facebook seeks to buy SnapChat, yet is spurned

SnapChat is an incredibly popular smartphone app with a simple concept. Users simply take pictures or videos and send them to their friends, only to have them disappear in short order. As of September, SnapChat claims to process about 350 million photo uploads per day.

That's an impressive number. But is it enough to make the company worth $3 billion?

Apparently, Facebook thought so.

According to an article on Wired, the social network recently offered SnapChat that amount. Though it may sound crazy to those who are unfamiliar with Facebook's history, the attempt at a technology acquisition makes sense. After all, Facebook has more than one billion users, many of whom share photos and videos every day. Last year, for example, the company bought photo sharing service Instagram for $1 billion. Instagram has since grown five times larger.

But it doesn't look like SnapChat will be following in those footsteps, however. Quartz reported that Evan Spiegel, the 23-year-old founder of the service, has turned down Facebook's offer.

That too makes some sense. SnapChat is not like Instagram, since its content is not permanent. The service still doesn't have any advertising, meaning it isn't making money. And since Facebook is quite interested in making SnapChat profitable, it may have had to change the service in some fundamental way to make advertising work.

It is possible that these changes would have been minor, and users wouldn't have minded. It is equally possible that they would have fled in droves.

Technology acquisitions are great opportunities for both large and small tech companies to share resources and reach a common goal. However, that may not always be the wisest move. Mark Zuckerberg should understand this—he rejected a number of buyout deals himself when Facebook was in its infancy.