In 2013, the founders of Snapchat ($SNAP) received an offer from Facebook ($FB) to buy their app. Mark Zuckerberg and company offered Evan Spiegel, Bobby Murphy, and Reggie Brown a whopping $3 billion for their company, their app, and their assets. Spiegel et. al. politely declined and built the app into what it is today.
Now, Snap Inc., Snapchat’s parent company, is a publicly traded company worth more than seven times what Facebook originally offered. Spiegel is a newly-minted billionaire after Snap Inc. went public, something he wouldn’t have been if he accepted Facebook’s offer. Snapchat is also one of the most popular visual media-based social networks, dwarfed only by the Facebook-owned Instagram.
Facebook, however, isn’t content with letting Snapchat slip away so easily. In the last few years, the company launched a few Snapchat clones of their own, only to shut them down rather quickly. Unable to admit defeat and share the social media market with another brand not owned by Facebook, the world’s largest social network decided to do something different. Instead of building a Snapchat clone, they would build Snapchat’s core functionality into Facebook apps already used by billions of people.
While Snapchat continues to add users and make headlines, Facebook’s copycat features are quickly catching up. This is starting to worry new $SNAP investors, who’ve lost faith a bit of in the company since it went public earlier this month. After all, if Facebook could beat Snapchat at its own game and offer millions of other features compared to the few Snapchat offers, how and why does Snapchat still exist?
Facebook recently launched Stories, a direct copy of Snapchat’s most popular feature.
Stories lets Facebook app users post images and videos directly from their mobile device. Users can add stickers, drawings, and comments on top of the media they posted. Facebook Stories also includes the face-morphing filters that made Snapchat skyrocket in popularity. As of today, all Facebook users have access to the Stories feature. This entices them to stay in the Facebook app and away from Snapchat. Facebook’s reasoning behind this is to be able to keep their stranglehold over the social media market and rake in some extra ad revenue, too.
Facebook’s standalone Messenger app also has Stories functionality.
Why anyone would share stories in a direct or group messaging app is anyone’s guess. Yet Facebook has hundreds of millions of Messenger users on iOS and Android. Having them play around with the Stories functionality not only keeps them in the Facebook ecosystem, but also directs them away from using a different app (like Snapchat).
Instagram’s Stories feature launched last year, and is one of the most-used functions in the app.
Facebook bought Instagram in 2012 for $1 billion, or a whole lot less than they offered Snapchat. Since then, the photo and video app grew to 600 million monthly active users. By adding Stories functionality in the app, Instagram gave their users no reason to go to another like app with less features. Instagram also monetizes their stories with non-intrusive ads, just like Snapchat.
WhatsApp also offers Status, an encrypted Stories-like feature.
When Facebook bought WhatsApp in 2014 for over $19 billion, they planned on running the app independently from their main platform. Yet Facebook’s influence on WhatsApp and their 1.2 billion users is clear when it comes to the occasional new feature. Status, for instance, lets users who might not have Messenger, Instagram, or the Facebook app enjoy the Stories-like functionality. Simply put, if Facebook has a mobile app, it’ll have a Snapchat clone attached to it.
Should you invest in $SNAP if Facebook can copy their features so easily? One thing that Facebook hasn’t proven yet is if their multi-pronged approach to copying Snapchat’s features work. Sure, there are probably a handful of 18-to-34-year-olds who don’t have a Snapchat account because they get the same functionality out of Instagram. Yet Snapchat is still growing and seeing new users despite these new feature additions to Facebook’s apps.
If you think Snapchat will continue to grow despite everyone trying to copy them, be sure to do your research before you invest. If you think Facebook’s approach will eventually put a dent in Snapchat’s bottom line, you might want to invest elsewhere.