Earlier this week we revealed that Facebook were the most active acquirer of Nordic Startups in 2014 (Pryte, Moves and 13thLab) and with $14B in cash and securities burning a hole in their pocket, I reckon it's only a matter of time before they resume shopping in the region, but who is next on their shopping list?
On the surface it may appear that Spotify would be the most obvious candidate, especially if Facebook decided they wanted to make a move in the music space, and the companies already benefit from a close relationship. However, I just can't see it (although I do believe Spotify's gesturing over it's IPO is in the hope of a bid from Google or Facebook) mainly due to two reasons.
Firstly, despite the subsequent purchases of Oculus Rift ($2B) and WhatsApp ($19B), During the Instagram acquisition announcement, Zuckerberg said: "This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all."
I believe that Oculus Rift and WhatsApp were simply too good an opportunity at that time to pass up on (driven by FOMO), but I don't think Spotify fit into that bracket, so I see Zuckerberg enforcing his loosely placed rule in the case of Spotify. Quite simply because if Facebook were going to buy Spotify, they would have done so already, most likely at the end of 2013 when Google were supposedly sniffing around.
Secondly, I just don't think music is a priority for Facebook right now. Their focus is elsewhere, namely: Video/Mobile advertising, VR, Generation Z Social and perhaps even that elusive OS. And it's with this criteria that I have identified six Nordic startups who could be at the top of Facebook's shopping list.
Facebook has recently started offering video ads to companies with some impressive results including a video for King that reached 100 million people in a day.
Videoly is an e-commerce tool that helps to increase sales by plugging-in video reviews, Its intelligent video search technology picks relevant product video reviews from user generated videos. Users watch video reviews right on the product description page without walking away to other sites. This sounds absolutely perfect for what Facebook are looking to achieve with their video advertising product, and it has the added benefit of being built on the power of the social recommendation, something which would fit very neatly into the Facebook family.
With close to 25% of advertising money now being spent on mobile, Facebook are also looking to innovate in that space and improve their mobile advertising offering in a move to compete with Google who they are still lagging behind in terms of global advertising revenue.
Adtile is a native advertising solution pioneered for the mobile industry, making advertising immersive and suitable for the World on the move. You can move your phone to find offers from shops around you while you are moving with its motion ads. Importantly, Adtile also comes with an advanced analytics suite. They've also just introduced FireMotion, the industry’s first light-weight mobile advertising OS which could also prove appealing to Zuckerberg and team.
Adtile seems to tick the boxes in quite a few places that Facebook are looking; augmented reality, advertising, e-commerce, mobile, and as such out of all the candidates on this list they would be the most likely in my opinion.
Not having their own Mobile Operating System has been the bane of Facebook's existence and has also been very costly, with the purchase of WhatsApp at $19B essentially the price they had to pay for not having their own OS, and instead pursuing a strategy of offering a must-have range of apps that people demand to have on their phones.
'Facebook Home' and the acquisition of Parse in 2013 are the closest that Facebook have come to creating/owning their own OS, with neither particularly succeeding. It could be argued that Facebook are now so far down the road of not having an OS that there is no turning back. However, Facebook still needs 'something' to help them get closer to developers, and if there was something available that wouldn't be too risky or costly, then I believe Facebook could still snap it up with the hope of being able to figure something out.
Jolla have created both hardware (they've produced their own smartphone and tablet) and their own operating system (Sailfish). If Facebook do decide to bite the bullet and finally produce their own phone and (more likely) get their own OS, then I can't see past Jolla.
Facebook is already a branding and promotional tool for millions and its always been keen to support creators, with 'Pages' being a longtime feature. Currently, they make money from promoted posts and advertising and the exchange between creators and Facebook is pretty one sided with Facebook taking money for visibility. But, what if both creator and Facebook could make money?
Foap allows photographers to upload their photo's and sell them to individuals or companies who are looking for 'stock' photo's. Imagine an integration with Instagram that lets young creators (and Facebook) make money from their photo's, as well as opening up the floodgates to 300million Instagrammers for those looking for stock photo's.
Facebook have long avoided encouraging people to make random social connections, however, the rise of apps such as Snapchat and YikYak which promote instant, brief, and more personal interaction appealing more and more to today's teenagers then they may have to change their policy on this if they are to stay relevant.
Their recent moves into 'unbundling the big blue app' and instead offering a suite of apps to offer apps for different contexts, ages, and interests is certainly a move in the right direction towards this, and I don't think it will be long until Facebook does venture out into the more 'instantaneous/random' space.
Wonderloop provides short video messaging about 10 to 20 seconds long. It allows short elevator style pitch introductions so you can get a sense of who someone is and is designed around how you might meet someone in real life. Their mission statement of creating a people based search engine also ties in nicely with Facebook's goals.
A big disclaimer here is that they would need to grow their userbase significantly for them to be of real interest, but stranger things have happened and if people do flock to Wonderloop once it opens properly, not only would Facebook have an app more in tune with Generation Z, it may even have the answer to LinkedIn on it's hands too.
Clearly, Facebook see Oculus Rift as more than a gaming platform, with the bet being that VR will become a part of everyday life. However, right now, essentially that's what it is, with video games the large bulk of what has been developed for the hardware. Facebook would be silly to dismiss it's potential as a gaming platform in the near term despite it's future as much than that.
And with this in mind, they could do worse than buy a developer who is solely focused on producing VR games.
Mindfield Games are doing just that, with their first title 'Pollen' due soon. The 2013 founded studio claim to have unique experience in arts, storytelling, game-design, graphical and audio programming and would appear to be a good fit if Facebook decided to produce some in-house games for the Oculus Rift.
Speculating on who the big companies might be is often like finding a needle in a haystack and often companies buy companies that are not even in a space that outsiders are aware they are looking at yet, making identifying them next to impossible. However, if Facebook do want to focus on the areas I speculated on then they could do worse than look at the six startups I have outlined above. Although, I can't be certain that Facebook will buy any of them, I am certain that Facebook will shop in the region again, most likely sooner rather than later.