Smaller companies have made a habit out of pinpointing Facebook’s weaknesses and then do a better job than social media giant could do. Instagram’s photo-intensive news feed was something Facebook lacked. Now Facebook owns Instagram.
One area where Facebook struggles is its mobile app. The company is struggling to find ways to create mobile ad space, but the problem is larger than that. Facebook dominates desktop computers, but it is far from a similar position of dominance on mobile phones. The latest craze is Snapchat (see early blog posts). When Instagram grew more popular and became a competitor for Facebook, Facebook bought the problem to make it go away. Facebook is trying to take a similar approach with Snapchat, but it does not seem to be working. The Wall Street Journal reported Wednesday that Snapchat turned down an offer of $3 billion from Facebook.
Snapchat’s rejection of the offer is perplexing because it does not have any revenue stream. As BloombergBusinessweek’s Joshua Brustein put it:
“It’s very possible Snapchat will crash and burn before ever getting its hands on so many zeros again. The app doesn’t make any money, it’s caught up in a controversy over whether its founders cheated a friend out of his fair share, and almost no one who has graduated college gets it at all.”
Snapchat’s owners said they will not consider any acquisitions or investments until at least yearly next year.
This is not Facebook’s first failed attempt to buy Snapchat. Last year Snapchat turned down Facebook’s first offer. Since Facebook couldn’t have Snapchat, it tried to provide the firm with direct competition. Facebook released an app called “Poke” to compete with Snapchat in the “disappearing picture message” market. The strategic concept played off the idea that they would hurt Snapchat by taking away their monopoly on the niche market. The copycat attempt backfired on Facebook.
When it comes to mobile messaging, Facebook’s mobile messaging app trails the industry leader, WhatsApp. If Facebook continues is history of buying its competition, perhaps we can keep an eye out for a WhatsApp acquisition on the horizon.