Facebook has acquired gifting application Karma, marking the social network’s first move as a publicly traded company. The move comes as founder Mark Zuckerberg changed his status to ‘married’ in a surprise wedding, capping off an extraordinary week for the 28-year-old.
Karma offers a free app, available for Apple and Android, which uses Facebook to remind users of their friends’ birthdays and other special occasions. The tool then lets them purchase and send gifts like champagne and chocolate along with personalized messages.
The buy is the latest in a series of recent acquisitions designed to monetize Facebook’s mobile efforts, following on the heels of deals for photo sharing app Instagram, customer loyalty service Tagtile and location-based discovery solution Glancee.
Mobile’s big challenge for Facebook
Facebook has yet to show how it will cash in on members using the service from smartphones or tablet computers. Ads are currently only displayed when people visit Facebook from desktop or laptop computers.
More than 488 million users worldwide access Facebook via mobile device each month, and the company has said it will look to mobile advertising as a major revenue source moving forward.
The addition of the Karma app expands Facebook’s footprint into the fast-growing mobile commerce segment, enabling the company to generate revenue from sales of physical goods driven by the social interactions at the core of its platform.
Critics maintain Facebook will struggle to make money in mobile, however. In the sixth revision of its S-1 filing, released just days prior to the IPO, Facebook admitted that increasing its mobile base and shifting users away from its ad-supported desktop services could negatively impact its business model and long-term revenue outlook.
Karma co-founders Lee Linden and Ben Lewis confirmed the deal on the startup’s blog, indicating that the application will continue to operate as a standalone product and that all 16 employees will join Facebook’s ranks.
Social commerce move?
The purchase of a gifting service also suggests facebook is moving more towards social shopping. Eugene Kaznacheev, product manager Ecwid, commented on the move: “There are estimates that the social commerce market will be worth up to $50 billion in the next eight years and undoubtedly Facebook is positioned to be the main primary beneficiary. With the company’s IPO garnering so much interest it is clear that shareholders will be wanting to see a return on their investment in the future. With this in mind it is a logical step that Facebook is trying to position itself as more than just a social networking platform.
“Facebook’s acquisition of Karma is a further indication that it has serious aspirations to become a commerce platform. Certainly we have already seen a positive trend from businesses selling through Facebook. Our own figures have shown that those e-commerce businesses that also have Facebook stores saw a 17.7% increase in revenue in the first quarter of 2012,” Kaznacheev added.
Lacklustre stock market debut
News of the Karma acquisition surfaced just hours after Facebook began trading on the Nasdaq. Facebook sold 421.2 million shares Thursday at $38 each to raise $16 billion, the second largest stock market debut in U.S. history.
However, Facebook closed Friday at just 0.6 percent above the IPO price, dogged by Nasdaq software issues that delayed sales of its stock.
“We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users increasing more rapidly than the increase in the number of ads delivered,” the filing states. “If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.”
Zuckerberg’s surprise wedding
On Saturday Zuckerberg married his girlfriend of ten years, 27-year-old Priscilla Chan, giving his new bride a ring he had designed with a “very simple ruby” to end an incredibly eventful week.
The couple married at his Palo Alto, California home in front of fewer than 100 stunned guests who thought they would be attending a party to celebrate Chan’s graduation from medical school.
Watch a video explaing how the Karma app works below:
