Facebook acquires Giphy, the big ones by the small ones, why is this happening?

Some days ago, Facebook acquired Giphy, one of the most important platforms for GIFs (animated images). It is not the first time and it will not be the last acquisition by a big technology company to diversify, to obtain certain technological capabilities and/or to improve its actual services. But, why do they buy them? And, why do this type of small companies accept?

It is usual to see how every year big technology companies buy start-ups or well-established companies to expand and/or improve their business models. Last month, several acquisitions have been remarkable:

• Microsoft buys Github for USD$ 7500 million.

• Microsoft buys NPM to integrate it with Github.

• An old significant one for the Spaniards, Telefonica acquires Tuenti (2013, a former social network).

These big corporations may have many reasons for the acquisition, including medium- and long-term objectives, which can not be easily figured out. However, this seems not to be the case of this last acquisition of the GIFs’ platform.

Facebook says that they will not collect specific individual information from the platform, but it will do it with the use patterns. And those patterns do not refer only to the use of the web, but to all those platforms which use Giphy through its API. An example would be Slack (platform for chats, most of them corporate), which has already communicated that it will not send users’ data when Giphy is included. Another of those platforms would be Microsoft Teams. It is important to mention that Facebook is blocked in most of corporate computers, which implies in many cases, that Teams configuration may change not to use Giphy any more.

The most important part also lies in what reasons cause that many companies are acquired by others and, in most of the cases, disappear. If we get to the point of having passed several financing rounds, the reasons seem quite obvious. The investors will want to get back their initial investment quickly and multiplied. However, when we are creating an open-source, is our final goal to sell our creation for a lot of money? Or, when we get that point, are we talking about start-ups rather than open-source software?

In some cases, the initial design starts with that goal, in other cases, it may result depending on the obtained outcomes, or on the partners which may have joint and/or, even on the fact that it is the fork of an idea which in fact searches for profitability.

The same way that gravity is a fact, big companies will keep swallowing the small- and medium-size ones which may help them to grow, and only a few, either by philosophy, or by expectations or by any other crazy reason, they will become big companies before being devoured.

Bibliography:

• https://www.facebook.com/

• https://giphy.com/

• https://en.wikipedia.org/wiki/GIF

• https://www.entrepreneur.com/article/304376

• https://www.xataka.com/aplicaciones/oficial-microsoft-compra-github-7-500-millones-dolares

• https://www.genbeta.com/desarrollo/microsoft-compra-npm-para-integrarlo-github-hacer-comunidad-incluso-atractiva-para-desarrolladores-javascript

• https://elpais.com/tecnologia/2013/11/06/actualidad/1383736297_604474.html

• https://slack.com/

• https://www.microsoft.com/en/microsoft-365/microsoft-teams/group-chat-software

• https://openexpoeurope.com/es/open-source-puede-ayudarte/

• https://www.eldiario.es/hojaderouter/tecnologia/software/software_libre-codigo_abierto-negocio-rentabilidad-empresas_0_523897642.html

 

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Translation by Santiago Moreira