Dive Brief:
- Facebook announced plans to acquire Redkix, an Israeli messaging company, according to VentureBeat. Redkix will join Facebook’s Workplace collaboration platform.
- Redkix works to create an interface that can link email, chat and other features together more seamlessly. In an example cited by VentureBeat, users could reply to direct messages by email or through Redkix's app. The company recently raised $17 million in venture capital.
- Facebook launched Workplace publicly in 2016 to rival enterprise software collaboration tools like Slack and Hipchat. Workplace had 30,000 business users as of October, while Slack reported 70,000 paid groups users in May. Microsoft Teams, another player in the space, had 200,000 groups using its platform in March.
Dive Insight:
With Workplace, Facebook has been hoping to build out a stronger presence in the enterprise technology sector, hoping that familiarity with its social media platform among employees and users will strengthen the product's appeal. The acquisition of Redkix signals that Facebook is recognizing that users will need additional integrations across channels, including email, to meet all of their companies' communications needs. Facebook didn't provide details about how it will integrate Redkix. Facebook previously unveiled new Saas and bot integrations for Workplace in May, per VentureBeat.
The acquisition will potentially help strengthen Workplace's positioning at a key time. Atlassian, which owns Stride and HipChat, this week announced plans to sell the enterprise communications services to rival company Slack. Workplace is a similar subscription service, and Facebook doesn't sell ads on the platform.
The researcher Gartner forecasts that spending on IT solutions, including enterprise software, could reach $3.7 trillion this year. For Facebook, the market offers an opportunity to seek out new revenue streams beyond its ad-supported social network, which is facing slowed advertising growth and has been shaken by controversies, including the Cambridge Analytica privacy scandal.
Facebook earlier this week reported $13.2 billion in revenue for Q2 2018, a 42% year-over-year increase. Its average price per ad increased 17%, and ad impressions served increased 21%, with growth driven by ads in Instagram and Facebook feeds. However, the company’s growth decelerated by about 7 percentage points from Q1. Facebook ultimately missed Wall Streets' estimates, slashing the company's market value by $151 billion at one point — a historic collapse in value for a U.S.-traded company to see in a single day, according to Bloomberg.
