Yesterday the web was abuzz with the rumor of Facebook acquiring the web browser Opera. The source of the rumor was an article published on Pocket-lint on May 25. Since whirlwind around the rumor started spinning, stock price of the Norwegian company, Opera Software ASA, has gained 26%, which is the biggest rise since its IPO in 2004. On the same day, stock price of Facebook has dipped below $30, which some analysts say could be attributed to rumors of its expensive acquisitions. The truth, though, could not be established.
But the real question is: should Facebook acquire Opera? And why Opera?
Why web browsers matter?
The web browser industry, though it has only free software, is a huge driving factor of growth on the web. This is the reason why Google went so ecstatic when its Chrome left likes of Microsoft Internet Explorer and Mozilla Firefox behind to become the most used web browser in the world. And the impact of web browser on the online business/industry will be more perspicuous if you know that almost all the major browsers are owned by big giants of the web world: Microsoft, Google, and Apple, and the last one to join the list is Yahoo with its Yahoo Axis.
For these companies, a web browser functions as a platform for data mining as well as surfers’ engagement with their brands. If you go beyond merely using these browsers, you will notice how these companies have integrated their other services with the browser, which help them bring users to their products. A web browser also helps its owner intargeting ads.
We all know that each browser has a default search engine, and any behavioral scientist will tell you about how the “default option” influences our behavior and how majority of people do not bother change the default engine. By having a browser of its own, a company can either push its search engine to the users or like Mozilla sign a multi-year deal with a major search engine, both of which are the source of possible revenue for the browser-owning company. It is worth mentioning that Mozilla has renewed its contract with Google to make it the default search engine on Firefox. For which, Google will pay around $300 million per annum to Mozilla.
Why Facebook should Acquire Opera?
In its S-1 filing for IPO, Facebook has mentioned that nearly half of the users of Facebook usage its mobile application, and at the moment Facebook does not have any way to monetize this traffic, which the company sees as one of the biggest risk factor of Facebook growth in the future. This makes more sense when you will know that more and more people are now using smartphones to access web, and soon it will surpass computers.
In this regard as well Opera is a nice candidate for acquisition because not only it is the most robust web browsers with cool features, but also because of its strong presence on the mobile platform.
Opera mini is the major browser on all mobile platforms including BlackBerry, iOS, and Android. And because the browser can compress the data to up to 90%, which saves users’ data cost, Opera users love the browser.
In total, around 250 million people use Opera every month, and as per a press release issued by Opera “In February 2012, the Opera Mini browser saw increases in unique users, page views and data consumed. In all, 160 million people used the Opera Mini browser in February, 108 billion pages were served.”
Analysts see it as a positive move from Facebook, which, from its own amission, lacks way to monetize its mobile traffic. In this regard, Aleksander Nilsen, an analyst at Abg Sundal Collier in Oslo said, “A deal would make strategic sense for Facebook. If they want to get their own browser, they have two alternatives: one is to build their own browser, which will take some time, and two is to buy a company that has a current browser. Opera is the only independent player here.”
Acquiring Opera looks like a good move, but whether “$1 billion” price-point justified or not is debatable. To me, it looks like a rich kid is splurging and wasting a handful of loose change one things that may matter (remember another Billion-dollar purchase Instagram?).
April 22, 2013, 5:55 am UTC
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