Early this morning Twitter delivered the trending topic ‘Techcrunch as we know it’, you can find out more about it here. It’s a very sad day indeed for the tech community and will no doubt add concern to other successful companies that have found themselves snapped up by other media conglomerates only to be later picked apart and merged into the abyss of a belching behemoth.
Should start-ups respond with the victory sign despite such promises of silent ownership? Or should they leap for joy at the sight any fruitful investment? Who knows, but let us look at some past acquisitions (for good and for bad):
Microsoft and Hotmail (1998)
At the time, $400 million was a staggering amount of money, but Microsoft decided to spend that on a free email service. However, this wasn’t all that they were buying into, it was access to an industry. At the time Microsoft were very much a software company and not the all singing-all-dancing Microsoft we have come to know today. It gave Microsoft a huge Internet base to direct their marketing at and many believe this was the linchpin behind MSN.com’s success. A costly but shrewd purchase by the Richmond outfit.
eBay and PayPal (October 2002)
A no brainer for eBay perhaps, but at $1.5 billion it certainly wasn’t a cheap one. At the point of signing on the dotted line approximately 60% of PayPal’s business came from eBay. PayPal now operates over 232 million accounts, in 24 currencies and has an annual revenue of $2.23 billion. Well played eBay.
Yahoo and Overture (2003)
In July 2003, Yahoo acquired Overture for $1.63 billion. Overture were the touted/expected/soon-to-be-perhaps ‘Google’ before Yahoo decided they wanted a piece of the PPC action too. Yahoo were the web company of the time and following on from the investment, Yahoo doubled its profits with the source coming largely from paid search. It’s a shame Overture (formerly goto.com) wasn’t a revolution in online marketing. Often brands would pay money for ‘space’ on a high traffic yielding site such as Yahoo, MSN and AOL and would hope that people would stumble across their ads and click. Overture instead offered search engines and rich-media portals to monetise their traffic according to intent and desire.
Coincidentally, in 2002 Google introduced a little service called AdWords Select that allowed online marketers to use a number of services very similar to those that Overture were offering. Yahoo sued and managed to get 2.7 million Google shares in trade off for a license.
eBay and Skype (2005)
In a half cash and half stock deal, eBay agreed to pay £1.4 million for the two year old VOIP company, Skype. EBay I presume, was hoping to use it’s earlier acquisition of PayPal to offer a full 360 purchasing experience by allowing buyers and sellers to talk one another, aiding transactions and the eBay buying experience.
Sadly four years later in 2009, eBay decided it would sell Skype to a group of private investors for £1.2 billion while keeping a 35% stake in the business.
Microsoft and Skype (2011)
Like a hardened traveller, Skype was to be moving again two years later and would find itself under the big and mighty wing of Steve Ballmer’s Microsoft for, wait for it… £5.2 billion! Considering the reports that Skype never once made a profit, it is no wonder analysts were blown away by the price tag.
The full extent of the deal remains to be seen (i.e. Nokia partnership, Xbox Live etc) but we have already seen the result of Facebook and Microsoft being in bed together with Skype powered Facebook Chat. More to be seen here i’m sure.
Yahoo and Microsoft (2010)
Busy Microsoft. After a lengthy ‘will they, won’t they’ debate on the tech forums, it was eventually cleared (despite ruffling Google’s feathers in the process) that Microsoft Bing would power Yahoo’s search services and in the process, ‘share the profits’. They have a combined revenue of almost $65 billion dollars.
OK, not so much an acquisition but a partnership, but it is one that we will no doubt look back on one day and see as a major milestone in Bing’s search history. (bad joke, sorry!)
News Corp and MySpace (2005)
In 2005 News Corp bought Intermix, parent company to MySpace, the fastest growing social network at the time. Intermix were of course worried what would happen to their prized asset, which at one point held 75% of the social networking pie and clearly something Murdoch wanted to get his grubby mitts on. In what now seems like an almost overnight nosedive, MySpace is a barely a shadow of what it once was. There was a silver lining to the deal for News Corp however. Thanks to its expansive media portfolio Google paid News Corp $900 million in a search deal.
MySpace was expected to reach the height of sums close to $15 billion by 2010 by some analysts, but the fickle business of the online community thought otherwise. Now worth a paltry $30 million, Justin Timberlake of all people is leading the charge for its resurgence.
Google and Admob (2009)
For a total $750 million purchase of stock, Google looked to Admob as it’s solution to dominate the mobile search arena. Founded three years earlier by the now very wealthy Omar Hamoui, Admob is the choice for app developers and mobile marketers alike.
Apple was once upon a time interested in Admob, but they were outbid by Google. Flexing their muscles and demonstrating their intent to slug it out within the mobile marketing space, Apple later announced the cliché, yet quaintly named iAds platform. As they say, the rest is history…
Google and YouTube (2006)
For what now seems to be an absolute bargain considering other valuations, in 2006 Google became the happy owner of YouTube for a cool £883 million. YouTube was barely a year old at the time and it was already delivering over 100 million videos a day, with over 72 million unique visitors a month. At the time it was seen as a powerful marketing platform by Mr. Schmidt and in smug nostalgic fashion he can rightfully say it was!
Anymore? Let me know in the comments :)
