Facebook To Acquire Chatbot Startup Kustomer

Facebook is acquiring customer service chatbot startup Kustomer, the tech giant announced in a press release Monday (Nov. 30).

Financial terms of the deal were not disclosed, but it could value the New York-headquartered startup at more than $1 billion, sources told The Wall Street Journal. Following a private funding round last year, Kustomer was valued at $710 million. 

Founded in 2015 by Brad Birnbaum, chief executive officer, and Jeremy Suriel, chief technology officer, Kustomer is an omnichannel software-as-a-service (SaaS) and customer relationship management (CRM) firm that specializes in chatbot technology.

Facebook said in the release that it’s acquiring the startup to “continue to support the numerous options that businesses have to integrate their CRM platform of choice with our messaging services,” and to help Kustomer scale its business and product offerings.

“We want businesses of all sizes and across all industries to discover the value of messaging — and having a vibrant partner ecosystem is critical in providing our customers with choices,” Facebook said in the press release, noting that over 175 million people use WhatsApp to contact businesses every day.

Shopify teamed up with Kustomer in July to advance more efficient operations. Kustomer said its platform will help retailers on Shopify automate 40 percent of interactions. The collaboration will also enable businesses to track all customer interactions.

Earlier this month, Joe Simons, chairman of the Federal Trade Commission, said when big companies acquire startups, that is a red flag signaling possible anti-competitive practices. 

Some fear that innovation could suffer if regulators come down on mergers and acquisitions. Simons said there could be blockades to end some usual routes to growth.

“A monopolist can squash a nascent competitor by buying it, not just by targeting it with anti-competitive actions,” Simons said earlier this month.

In a PYMNTS interview, Jim McCarthy, president of i2c, said global regulatory forces are largely over-reacting when it comes to competition law and Big Tech and the results could have consequences. He said the intersection of data, privacy, and consumer protection make the issue difficult, and the solutions offered haven’t had consumers’ interests in mind. 

The Pandemic Anti-Monopoly Act was introduced earlier this year by Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez and calls for an M&A moratorium involving companies with more than $100 million in revenue or financial institutions (FIs) with more than $100 million in market capitalization.