Here’s a rundown of the 10 of the most expensive Internet buyouts in the recent past, complete with our pick for the highest spenders.
Getting a leg up
in the tech industry can be a highly challenging task. Most big
companies invest millions of dollars in R&D and innovation, but also
have to keep an eye out on the emerging businesses and startups that
can give them an advantage over bitter rivals. This has been the case
since time immemorial, but only recently has there been a strong
spotlight on Internet buyouts. The reason: Bright startups with good
products are becoming increasingly ubiquitous these days thanks to
concepts like crowd-sourcing and crowd-funding. This has resulted in a
spike in the number of acquisitions recently. That said, the enterprise
space has been largely neglected.
Even the likes of Google, Yahoo!, Amazon and Microsoft have had to
take the acquisition route to one-up the competition. You may know of
the bigger acquisitions that have happened recently, the
Facebook-Instagram deal, for instance, but some buyouts slip under the
radar. Here’s a rundown of the 10 of the most expensive Internet buyouts
in the recent past, complete with our pick for the highest spenders.
Deal – Microsoft acquired Skype in 2011
Value – $8.5 billion
That billion dollar handshake
The story – After pursuing it for months, Redmond,
Washington firm Microsoft finally acquired popular VoIP service Skype in
October 2011. The deal was finally sealed for a whopping $8.5 billion,
after the European Union (EU) gave it its nod – making it one of the
priciest buys of that year.
It clearly isn’t the first time that the now massively popular
service changed hands. eBay, the popular online auctions destination,
had in fact acquired Skype in September 2005. However, it announced in
April 2009 that it plans to spin it off in a 2010 IPO. From there,
Silver Lake Partners acquired it in 2009. As it stands today, Skype is a
division of Microsoft called Microsoft Skype Division. Skype though
popular, often finds itself grappling in hot waters owing to the nature
of the service.
All in all though, Microsoft seems to have done well for itself by making this purchase.
Deal – Intel acquired McAfee in 2011
Value – $7.68 billion
For better security solutions
The story - The semiconductor chip maker took in
McAfee, a noted name in computer security space, for that sum, after
almost a year of announcing that a deal was coming. Intel confirmed that
it wanted to offer security to emerging technologies.
Deal : Yahoo! acquired Geocities in 1999
Value – $3.57 billion
Picked the third-most visited site in the world in 1999
The story - Geocities, for those who remember it,
was really popular back in the day – it was the third-most visited site
on the web. A known web hosting service, GeoCities allowed users to
pick a "city" in which they would want to place their web pages. These
were named after real cities or regions, depending on the content. It
got really popular over time, so much so that by 1999 it became the 3rd
most visited website in the world.
That year, Yahoo! took it under its fold, and like many other
acquisitions, downed the shutters on it in 2009 – you can still log on
to the Japanese version of the service. #justsaying.
Deal – Adobe acquired Macromedia in 2005
Value – $3.4 billion
Adobe gets flashier!
The story - With this deal, the ubiquitous
(irrespective of what Apple says) Flash came under Adobe’s wing. The
2005 deal cost Adobe $3.4 billion. Adobe viewed its deal with Macromedia
as a way to fulfill consumers' demands for for making audio and video
documents, and images compatible with their handheld devices. The
company also received access to the popular animated graphics software
that has been making a headway to mobile phones.
Deal – Google acquires DoubleClick in 2008
Value – $3.1 billion
Google goes shopping
The story – After almost a year of announcing its
intention of acquiring DoubleClick, Google finally completed the deal in
2008 for $3.1 billion in cash. In fact, roughly a year later, on April
2, 2008, Google said it would cut 300 jobs at DoubleClick, citing
organisational redundancies. A few selected employees, it is known, were
to be taken into Google, as per position and experience.
Founded in 1995, DoubleClick was a noted name in online advertising industry; it provides Internet ad serving services.
Deal – Google acquired YouTube in 2006
Value – $1.6 billion
...and they lived happily ever after
The story – Yes, the two seemed like they have been
with each other forever, but truth is that Google acquired the now
massively popular YouTube, back in 2006. The two have remained
inseparable ever since. Google paid big money – a good $1.65 billion –
to get YouTube, and at the time of finalising the deal, it was the
search giant’s largest acquisition. Psst! It is said that Yahoo! was in
the bidding race right till the end!
YouTube is the birthplace of the success of the starry Gangnam Style
and Kolaveri Di, and is the go-to platform for many of us to discover
many cool videos – be it a music album or our favourite show. It boasts
of a user base that spans the expanse of the globe. Each year, the site
puts out mind boggling numbers for stats; for instance, it now boasts of
having over a billion unique visitors and a mind-boggling 4 billion
hours of video are viewed each month.
Deal – eBay acquired Paypal in 2002
Value – $1.5 billion
eBay buys PayPal
The story – eBay, the popular auction website,
picked PayPal for that price and said it would discontinue its own eBay
Payments service by Billpoint. PayPal's services were used by many of
eBay's loyal customers and hence, this deal made sense. Today, PayPal is
one of the largest online payment/money transfer services.
Deal – Symantec acquired VeriSign’s security business in 2010
Value – $1.28 billion
Veri sure about security
The story – Noted computer security company Symantec
paid that sum to acquire VeriSign's identity and authentication
businesses – its Secure Sockets Layer (SSL) Certificate Services, Public
Key Infrastructure (PKI) Services, the VeriSign Trust Services and the
VeriSign Identity Protection (VIP) Authentication Service.
Deal – Yahoo! acquired Tumblr in 2013
Value – $1.1 billion
Yahoo! Tumblr
The story – A quick recap: A mature Yahoo! wanted to
be “cool again”, at least that’s what CFO Ken Goldman told the
press/whoever (not a speech). Tumblr, one of the coolest places to be
in, became the obvious pick for the company, and the deal followed soon
after. It wasn’t all smooth though on the user side. Some even started a
petition to prevent the sale from happening, while it left some others
thinking about switching over to other platform.
The deal has happened and CEO David Karp has promised to not “screw it up”. We’ll wait and watch to see how this one’s faring.
Deal – Amazon acquired Zappos in 2009
Value – $850 million
Creating a mark!
The story – Amazon.com and Zappos.com, two popular online retail entities, came together in a deal amounting to $850 million, in 2009.
Zappos, like Amazon, is a highly customer-friendly unit with a great
culture – just the kind of thing the otherwise self-sufficient Amazon
would have been looking for.
As part of the deal, Amazon was to purchase all of Zappos'
outstanding shares, options and warrants from Zappos for 10 million
shares of its common stock. Also, it was to provide $40 million in cash
and restricted stock, specifically for the employees at Zappos. The
service, though, has seen instances of legal troubles in the past owing
to the content found on it.
Deal – Facebook acquires Instagram in 2012
Value – $715.3 million
For a better photos experience
The story – This one seemed to many a marriage made
in the proverbial “heaven”. Social networking giant Facebook took
budding photo-sharing app Instagram under its wide, wide fold last year.
Many took to it as an obvious progression by the social networking
giant, since so many users share so many pictures each day on the
platform.
When the parties had first agreed to it, the deal was valued at $1
billion. However, around the time of the deal being finalised,
Facebook's stock price dropped. Finally, when the deal was closed, its
worth was pegged at about $715.3 million – $300 million of it in cash
and the rest in stock.
Many ardent users of Instagram did not take to the big change nicely.
Months after the deal came through, Instagram made changes to its
Terms of Service to the effect that it gained rights to sell users'
photos to third parties without any notification or compensation
whatsoever, starting January 16, 2013. Needless to add, the news created
quite a noise among users, celebrities, privacy advocates. Instagram
was eventually forced to rollback the changes.
Top spenders
Yahoo! wins this one hands down. If you could look at the purchases
Yahoo’s made in the years leading to this day, you would agree with us.
GeoCities marks the earliest Yahoo! acquisition and Tumblr’s its most
recent purchase, and it is said that the company is also bidding for
Hulu.com, the international television content website owned by Fox,
Disney and Comcast. In the years in between, Yahoo! put the likes of
Broadcast.com, Flickr, Right Media, among others, in its shopping basket
too.
Who knows? Even as you’re reading this, some new deal may be taking
shape, getting ready to change the way you and I have been using some
product and service.
