Social networking is a tough business these days, even if you're at the top of the game, like Facebook. Google might have made repeated attempts -- and failures -- to make a dent in Facebook's social networking business, but the search giant's most recent effort, Google+, is seen as serious competition by Facebook with its simplicity and potential for being a viable platform for apps and games. In the face of tough competition, Facebook is looking into beefing up its capabilities through acquisitions that will improve its services and capabilities.
Encouraging an Entrepreneurial Environment
Facebook believes that offering users a better interface and more access options can help stave off other networks eating into its user base. To counter the rising popularity of competitors such as Google+, Facebook's director of corporate development, Vaughan Smith, says the company is looking into acquiring about 20 companies this year, twice its 10 acquisitions of 2010. Its focus is companies that provide better ways through which users gain access to the service, such as through mobile phones and tablets.
While Facebook can most certainly work on building its own apps and services, Smith says the company wants to encourage entrepreneurship, hence is going on the lookout for good brands to acquire. "We've built a culture that supports entrepreneurs, and it's working incredibly well," he says.
Bringing New Talent Onboard
Some analysts believe that Facebook's planned string of acquisitions is actually meant to bring in fresh talent -- that is, the company will "acqui-hire" companies and teams known for having great potential at building good products. EMarketer analyst Debra Aho Williamson says Facebook is interested in "[t]he idea of bringing in new talent, smart talent, people who have created interesting products that [the company] can capitalize on."
Facebook's recent acquisitions mostly involve mobile access and interfaces. Facebook has acquired 13 companies in 2011 to date, including a group-messaging service that it plans to roll out this month. The company has also bought mobile platform Snaptu, user interface developer Sofa and touchscreen device experts Push Pop Press. With the computing world moving away from desktops, Facebook has also been reportedly looking into an HTML5 implementation that will ensure consistent access from any device.
The Future of Social Networking
With its acquisitions in mobility, interface design and the like, analysts believe Facebook still has one area to focus on, which is computing. The company might be looking into acquiring teams that can beef up its data processing capability. With more than 750 million users, a plethora of web-based applications and a new datacenter, Facebook will need the capability to keep its systems working efficiently.
Of course, all of this will need money. Privately held, Facebook isn't really lacking in terms of financial capability. With a market value of more than US$ 70 billion, Facebook isn't exactly a small, fledgling company. But its biggest competitor, Google, is sitting on half that amount in cold cash. The challenge will now be for Facebook to come up with a good strategy for acquiring talent and products that will help the company stay competitive amid other big names in the social networking scene.