Meta Platforms Inc. confirmed this week that it has closed the $1 billion acquisition of customer service startup Kustomer. The deal was first announced all the way back in November 2020, but has undergone long delays due to regulatory scrutiny – especially EU antitrust approval.
This specifically involved a full-scale investigation from the European Commission that was prompted and amplified from broader regulatory concerns over Meta’s buying spree. Beyond Meta, there’s been a greater spotlight on Big Tech firms… and acquisitions that make them bigger.
So what tipped the scales for EU approval? Meta conceded on providing its rivals in the region free access to its messaging channels for 10 years. This alleviated the bulk of the European Commission’s concerns about anti-competitive behavior and should keep things fairly open.
“Our decision today will ensure that innovative rivals and new entrants in the customer relationship management software market can effectively compete,” EU antitrust chief Margrethe Vestager said in a statement.
Customer Experience
Backing up, what is Kustomer and why did Meta (then Facebook) acquire it in the first place? Kustomer specializes in CRM software that cuts across communication channels – phone, email, text, WhatsAPP, Instagram, etc… The latter two channels obviously tie back to Meta.
Moreover, Meta is increasingly keen on conversational commerce. This utilizes messaging channels for customer acquisition and support. The thought is that many consumers – especially younger ones – are already active in messaging apps and see phone calls as passé.
In fact, conversational commerce is the core business model for WhatsApp and Facebook Messenger (and Instagram to a lesser, but growing, degree). Kustomer elevates these businesses by bringing more structure and CRM capability to business messaging.
For example, with Kustomer’s support software, Meta can offer businesses a more holistic way to support their customers via messaging. That includes things like customers’ likes, past purchases, and other signals that enhance messaging exchanges and CX (read: retention).
All Messaging is Local
Channeling my colleague Neal Polachek, this deal traces back to local commerce in a rather direct way. Leading the acquisition at Meta were two execs that have been actively engaged at past Localogy events: Dan Levy (VP of Ads at Meta) and Matt Idema (COO of WhatsApp).
As Neal wrote at the time of the acquisition announcement:
Having these two local industry leaders make the announcement tells us this acquisition is focused on improving CX for small businesses. This is an investment in all of the SMBs that may someday rely on Facebook for customer acquisition or WhatsApp for customer invoicing and servicing.
Furthermore, here’s what Levy and Idema co-wrote in the Meta announcement at the time:
We’ve witnessed this shift firsthand as every day more than 175 million people contact businesses via WhatsApp. This number is growing because messaging provides a better overall customer experience and drives sales for businesses. To that end, we recently announced several API updates for WhatsApp and Messenger, allowing for further integration into our partners’ tools and faster onboarding to help businesses manage their communications with customers.
We’ll keep watching to see if Kustomer adds value to Meta’s conversational commerce aspirations. With several balls in the air – some futuristic and speculative – conversational commerce provides Meta with some potential (and much-needed) meat & potatoes growth in its core business.
