What are Facebook subsidiaries?

Facebook, a social media service now owned by Meta, was founded in 2004 by Mark Zuckerberg with fellow Harvard students and roommates Chris Hughes, Dustin Moskovitz, Andrew McCollum, and Eduardo Saverin. Since the company was founded some seventeen years ago, it has moved far beyond a simple social networking platform into related industries such as virtual reality, web analytics, artificial intelligence, and even solar-powered drones.

Oculus

Oculus is a producer of virtual and augmented reality hardware and software originally founded in 2012 by Palmer Luckey, Brendan Iribe, Michael Antonov, and Nate Mitchell.

The first product Oculus released was Oculus Rift, a virtual reality headset for video gaming. 

Facebook acquired Oculus in 2014 for $2.3 billion in cash and stock – the company’s second-largest acquisition behind WhatsApp.

Since then, Oculus has spurned subsidiaries of its own such as 3D scene mapping company Surreal Vision and American video game developer Sanzaru Games.

Ready at Dawn

Ready at Dawn is a California-based video game developer composed of former employees of Blizzard Entertainment and Naughty Dog.

The developer is perhaps best known for the titles Daxter and God of War, and now operates a separate campus in Oregon to further its development ambitions.

Ready at Dawn is another Oculus subsidiary acquired in June 2020 to create virtual reality titles for the platform.

Giphy

Giphy is a database of short looping videos that social media users in visual communication.

The database, launched in 2013 by Jace Cooke and Alex Chung, started as a search engine for the more primitive GIF.

Various apps and acquisitions were made over the following years as Giphy increasingly integrated with social media.

The platform passed 200 million daily active users in 2017 and was acquired by Facebook three years later for $400 million.

However, the deal attracted scrutiny in the United Kingdom for anticompetitive behavior and because of Facebook’s recent privacy scandals.

In late 2021, antitrust regulators in the UK ordered the company to divest Giphy. This is a decision that Facebook has decided to appeal.

Kustomer

Kustomer is a CRM platform that Facebook acquired toward the end of 2020.

The omnichannel platform can show customer conversations from multiple channels in a single view and has become a useful tool for small businesses that advertise and sell on Facebook.

Kustomer is also used by larger clients such as Sweetgreen, Glossier, and Abercrombie & Fitch Co. 

In addition to the CRM platform, Kustomer also offers chatbots that use artificial intelligence to interpret customer intent, enable self-service, and resolve queries more efficiently.

Ascenta

In March 2014, Facebook acquired solar-powered drone manufacturer Ascenta for $20 million.

The move was seen as a response to Google’s purchase of a similar company as part of a race to connect remote locations worldwide to the internet.

As part of the deal, Ascenta and its specialist staff joined a team of scientists and engineers as part of Facebook’s Internet.org non-profit to beam the internet to the world from the sky.

Key takeaways:

  • Since Facebook was founded some seventeen years ago, it has moved far beyond a simple social networking platform into related industries such as virtual reality, web analytics, artificial intelligence, and even solar-powered drones.
  • Facebook subsidiaries include virtual reality software and hardware company Oculus, which now has several video game development subsidiaries of its own.
  • Solar-powered drone manufacturer Ascenta and CRM platform Kustomer are also Facebook subsidiaries. Facebook also acquired animated video platform Giphy in 2020, but the deal was considered anticompetitive and it remains to be seen as to whether the company will have to divest.

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Related Business Models

Mark Zuckerberg Empire

who-owns-facebook
Mark Zuckerberg is the principal shareholder of the company. Not only he retains ownership and control of the company. Facebook, like Google, has issued two kinds of common stocks, Class A and Class B. Where the holders of Class B common stocks are entitled to ten votes per share, and holders of our Class A common stocks are entitled to one vote per share. Mark Zuckerberg has a total voting power of 57.9%. 

Attention-Merchants Business Model

attention-business-models-compared
In an asymmetric business model, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Asymmetric Business Model

asymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility.

Facebook Business Model

facebook-business-model
Facebook, the main product of Meta, is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues, in 2021, of which $114.9 billion was from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm). 

Facebook ARPU

facebook-arpu
The ARPU, or average revenue per user, is a key metric to track the success of Facebook – now Meta – family of products. For instance, by the end of 2021, Meta’s ARPU worldwide was $11.57. While in US & Canada, it was $60.57, in Europe, it was $19.68, in Asia $4.89, and in the rest of the world, it was $3.43.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organizational structure is organized around the leadership of Mark Zuckerberg and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).

Metaverse Supply Chain

facebook-metaverse

Google Business Model

hidden-revenue-model-google
A hidden revenue business model is a pattern for revenue generation that keeps users out of the equation, so they don’t pay for the service or product offered. For instance, Google’s users don’t pay for the search engine. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.

TikTok Business Model

tiktok-business-model
TikTok is a Chinese creative social media platform driven by short-form video content enabling users to interact and generate content at scale. TikTok primarily makes money through advertising, and it generated $4.6 billion in advertising revenues in 2021, thus making it among the most popular attention-based business models or attention merchants.

Instagram Business Model

instagram-business-model
Instagram makes money via visual advertising. As part of Facebook products, the company generates revenues for Facebook Inc.’s overall business model. Acquired by Facebook for a billion dollars in 2012, today Instagram is integrated into the overall Facebook business strategy. In 2018, Instagram founders, Kevin Systrom and Mike Krieger left the company, as Facebook pushed toward tighter integration of the two platforms.

YouTube Business Model

how-does-youtube-make-money
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, and it generated more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.

Twitter Business Model

how-does-twitter-make-money
Twitter makes money in two ways: advertising and data licensing. In 2021, Twitter generated $4.5 billion from advertising and $570 million from data licensing. While Twitter generated $5 billion in total revenues, it lost 221 million.

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