What happens to your data when online services are snapped up by bigger rivals? Nicole Kobie exposes the truth behind the web’s biggest buyouts
Multi-billion dollar tech acquisitions may seem to have little relevance for us humble users, but there’s no question that they affect our lives online. When the big fish snap up smaller fry, it may be because they’re after their technology or aiming to wipe out competition, but in many cases, they’re most interested in vacuuming up your data.
Facebook’s acquisition of the popular messaging app WhatsApp is a perfect example. When Facebook bought the company for $19bn two years ago, WhatsApp’s founders promised they would never share user data with their new parent firm. However, in September, WhatsApp asked its users to agree to new terms of service that allow the app to share their data with Facebook for the purpose of targeted advertising. Promises fade quickly in the face of $19bn deals, especially with a new boss in charge.
In this feature, we reveal the other popular apps and services that have been bought by big tech firms, and explain what it means for your data.
Google already controls much of our web browsing, thanks to its enormously successful search engine and Gmail service, but the company has been busy extending its reach with a host of acquisitions. Going as far back as 2003, with its purchase of blogging service Blogger followed by photo tool Picasa a year later, Google has snapped up companies including Android, YouTube, Nest and even phone maker Motorola, which it later sold to Lenovo.
In 2006, Google bought YouTube for $1.65bn. At the time, Google said YouTube would be run independently but then in 2011, despite protests, Google insisted that users sign in using their Google+ accounts, in effect linking the two sites. Users were particularly upset because the Google+ ‘real name’ policy meant YouTubers lost their online aliases. The move backfired, not due to user complaints, but because Google+ failed to catch on.
Google has a history of shutting down its acquisitions. Picasa, the smartphone app Bump and smart-home company Revolv were all either integrated with Google’s own products or closed. Google’s money doesn’t necessarily mean success for a startup – or for its customers. A lack of support left owners of Revolv smart-home hubs with useless hardware after the company was bought by Nest (nest.com), which was in turn bought by Google.
The acquisition of Nest raised further privacy issues. One of the reasons Nest’s smart thermostat was popular with users was that the company wasn’t owned by any of the big tech firms – a bonus for anyone who didn’t want their home data being linked to other online accounts. Then Google came along. Nest founder Tony Fadell said at the time: “We’ve always taken privacy seriously and this will not change”. But sure enough, in June 2014, Nest started passing data from its apps to Google.
Facebook has made two other controversial acquisitions besides WhatsApp: the Oculus Rift virtual-reality headset and the Instagram photo app. The latter is the most significant in terms of the quantity of user data it transferred to the company.
When Facebook bought Instagram for $1bn four years ago, many assumed it was for the app’s successful mobile photo-sharing technology. Instagram had amassed tens of millions of users, while Facebook struggled to get anyone to use its own app. Within months, Instagram users were angered by plans to use their photos in ads without compensation – a move that the companies quickly dropped. Since then, Instagram has introduced adverts and switched from chronological posts to algorithmic ordering, similar to Facebook’s default News Feed. It now shows the pictures it thinks you’ll want to see first – a controversial change that allows Facebook to slot in ads more easily. Facebook and Instagram share your data, too, which is how the app is able to tell you when a Facebook friend has signed up for Instagram.
Microsoft
Microsoft has picked up its fair share of tech companies over the years, but its three most recent acquisitions – Skype, Mojang, and LinkedIn – attracted the most headlines.
In 2011, Microsoft paid $8.5bn to buy Skype, which was previously owned by eBay. The move pulled many millions of Skype users into the Microsoft database, and also led to the company rolling its own Windows Live Messenger and Lync tools into Skype. That’s not the only change, though: adjustments to the way the VoIP system runs are thought by many to make it easier for Microsoft to snoop on Skype calls.
Next, Microsoft spent $2.5bn buying Mojang, the developer behind the hugely popular game Minecraft. Again, Microsoft acquired a huge amount of user data in the deal. The game is now being developed for HoloLens, Microsoft’s virtual-reality headset.
Then there’s LinkedIn. Microsoft surprised many by shelling out $26bn for the professional social network earlier this year. Microsoft is expected to keep the brand name – as it did with Skype – and share LinkedIn’s data between both companies. Such integration is set to benefit business users, according to Microsoft, because Office 365 could suggest experts from your circle when it sees you’re working on a related task, or give biographies of participants in a meeting to reduce time spend on introductions. If you receive an Outlook message from someone you don’t know, you can add them to your network to find out more about them.
Yahoo
The history of the troubled tech giant Yahoo highlights the problems user data poses on both sides of an acquisition. Yahoo had bought several web businesses, including Flickr and Tumblr, before it announced in July that it, in turn, would be bought by Verizon, the largest phone network in the US. Soon afterwards, however, details of a massive security breach came to light, in which 500 million users’ details were stolen.
The acquisition of Flickr in 2005 saw Yahoo pick up the then-popular photo site for a reported $35m. Flickr co-founder Stewart Butterfield said years later that the buyout had all but killed innovation at the company, which was an early exponent of cloud storage and social media. Yahoo failed to invest in Flickr, leaving it to stagnate without even a mobile app until 2009.
When Yahoo bought Tumblr in 2013, CEO Marissa Meyer announced the deal with a “promise not to screw it up”. Some may feel she failed on that promise, but Tumblr was short of cash before the acquisition, so the deal may actually have helped keep it afloat. Tumblr is still around but, like Flickr, has been pushed to the background by rival apps such as Giphy and Snapchat.
Verizon’s $4.8bn buyout of Yahoo’s business raises questions about the future of Flickr and Tumblr. Verizon has said the brands will operate separately from its own core business, but will either site be seen as having any money-making potential? That said, Verizon owns AOL, which is decidedly long in the tooth, so perhaps Tumblr and Flickr have a chance at survival, too. With the news of Yahoo’s enormous data breach, however, it’s not known whether Verizon will even proceed with the buyout.