the massooleh commblog

Thomas Campbell recently offered his views on a recent article in the Wall Street Journal about SnapChat’s peculiar decision to reject Facebook’s $3 Billion acquisition deal, pointing out that the company has no real revenue stream at all.

It’s important to look at the acquisition from Facebook’s perspective, and try to understand why they would offer such a high price.

It is readily apparent that Facebook’s largest revenue stream comes from advertisement, a service that is very dependant on how the company stores information from its users’ profiles: friends, likes, location. The more information Facebook has on its users, the better the functionality of its advertising service.

Startups like SnapChat pose a threat to Facebook, because their main value proposition is in doing the exact opposite: destroying all content posted in an aim to offer its users a platform without risk; mainly, your parents, employers and friends won’t see the embarrassing SnapChat that was taken of you at that party that one night.

A platform like this, and one gaining popularity at such an intense pace, poses an integral threat to Facebook’s business model, which would perhaps explain why Facebook is so intent on buying them out.

It might also explain why SnapChat is so intent on declining.