Facebook to acquire startup Kustomer as it faces antitrust glare

The deal values Kustomer at close to $1 billion
Last Updated 30 November 2020, 19:12 IST

Facebook is facing the glare of regulators for buying up promising startups and neutralising them as a competitive threat. That hasn’t stopped it from shelling out for more companies.

The social network announced Monday that it planned to acquire Kustomer, a customer relationship management startup, to help it build its e-commerce business. The deal values Kustomer at close to $1 billion, said two people with knowledge of the talks. Kustomer, which is based in New York and was founded in 2015, had raised roughly $170 million in venture funding, according to data compiled by Crunchbase.

The deal, which has not yet closed and is subject to regulatory approval, could provide businesses and customers more support for interactions that occur on Facebook and its other apps, such as WhatsApp, Instagram and Facebook Messenger. More than 175 million people contact businesses using WhatsApp, Facebook said.

“Messaging provides a better overall customer experience and drives sales for businesses,” Dan Levy and Matt Idema, executives at Facebook and WhatsApp, said in a company blog post.

Facebook announced the deal even as the Federal Trade Commission and dozens of states prepare antitrust lawsuits against the company for maintaining its power through past mergers of nascent competitors. The FTC and state attorneys general are expected to announce plans for legal action within days, several people briefed on the cases have said.

The cases are likely to focus on how Facebook came to dominate social media through its $1 billion acquisition of Instagram in 2012 and its $18 billion purchase of WhatsApp in 2014, they said. The companies were not directly competing with Facebook at the time but have become highly popular apps with billions of users.

Apart from Kustomer, Facebook also bought Giphy, a maker of animated GIFs, for $400 million this year.

Facebook said tying in the software from Kustomer could help support millions of business conversations, making it easier for customer support representatives to view and service the interactions through a single, simplified back-end interface. Kustomer is similar to other customer relationship management software companies like Zendesk, Salesforce or Intercom.

(Published 30 November 2020, 17:18 IST)

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