Snaptu fears for future after Facebook acquisition

Facebook has quickly shut down the companies it has purchased in the past.

Just two days after Facebook announced that it will acquire Israeli start-up Snaptu Ltd., there are big questions about the future of the company, its 30 employees, and its mobile application.

Snaptu founder and partner Ran Makavy tried to calm employees' fears in a conversation with "Globes" yesterday. "Ten employees will move to Facebook's headquarters in the US, and some will stay in Israel. There has been no final decision about sending anyone home."

Snaptu's technical staff, such as its software engineers, will reportedly head to Palo Alto. However, the fate of the company's other employees, such as its marketing staff, is shrouded in doubt, because Facebook, run by CEO Mark Zuckerberg, has a large marketing staff and probably has no need of more.

However, it is not only the future of Snaptu's employees that is in jeopardy. Experience suggests that Snaptu's 30 million users are liable to wake up one day soon to discover that the application they have been using to connect to Facebook has vanished. Facebook has made 11 acquisitions since 2007, mostly in the past year, and almost none of the acquired companies' services survived.

An example is Hot Potato, a website that offered location-based services, which Facebook acquired for $10 million in August 2010. Hot Potato's website includes the statement, "We no longer provide any technical support for Hot Potatoes or Quandary." Clicking on support states, "We no longer provide ANY technical support for Hot Potatoes. Please DO NOT CONTACT US for technical support. We will simply ignore your emails." and transfers a user to a Yahoo! Groups page within seconds.

The website of ChaiLabs, which Facebook also acquired for $10 million in August 2010, only displays the ChaiLabs logo. Its service has been closed down.

This is Zuckerberg and his staff's standard operating procedure: acquire a company, move its employees to Facebook's headquarters, and close the company's services almost immediately. This procedures was apparent at Facebook's first acquisition, Parakey, in 2007, whose website was closed down after its two founders Blake Ross and Joe Hewitt, who earlier founded Firefox, joined Facebook.

The jury is still out on Beluga, which Facebook acquired earlier this month and whose group messaging application is still available. However, this appears to be a temporary condition until Facebook absorbs Beluga's staff and shuts down its service.

Snaptu's fate is still unknown, but history is working against it. The same holds for initial hopes that Snaptu would be the foundation for a Facebook development center in Israel.

Facebook is still a young company, and it is doubtful that it will establish its first development center outside the US in Israel. Companies like Google Inc. (Nasdaq: GOOG) and Microsoft Corporation (Nasdaq: MSFT) took a long time before establishing development centers outside the US, let alone in Israel, so there is nothing to build on from that direction.

Published by Globes [online], Israel business news - www.globes-online.com - on March 22, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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