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2 minute read / Jun 14, 2013 /

Piecing Together A Quilted Social Network: Does M&A Work for Social Nets?

In the past 12 months, we’ve seen at least three major acquisitions of social networks by larger social networks. Facebook acquires Instagram. Google acquires Waze. Yahoo acquires Tumblr. And we are likely to see quite a few more given the dramatic growth of mobile messaging clients and social networks of all different kinds.

While each of these acquisitions has their own particular motivations, underpinning all three is user engagement. Engagement means activity which translates to advertising dollars. Additionally, it is not unreasonable to suspect that all of these acquisitions will one day be used to bolster the parent companies own social network: Facebook and Google+. Yahoo’s plans are less clear.

The success of these acquisitions boils down to one question: could a patchwork quilt of social networks succeed? How do you integrate two networks together without alienating the communities and destroying the value of the acquired company?

Acquiring a social network is not like acquiring another consumer business. There is an additional variable that increases the integration complexity dramatically: the community. Each social network is a community with proprietary norms and manners. Often times these networks have very different cultures that don’t necessarily mix well together.

Google’s YouTube acquisition was probably the first major social networking acquisition that ultimately became a success. By and large Google let the company operate independently in recognition of its dramatically different culture, both internally and within the community, melding the Google Plus and YouTube graphs over a few years. Facebook is following suit with the Instagram acquisition.

In a next 18 to 24 months, I am anticipating a flurry of social networking acquisitions. These might be gaming social networks, mobile messaging clients, professional networks. The key to the success of these acquisitions will be stitching the communities together.

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