(Bloomberg) -- Match Group Inc., which has become a behemoth in online dating by swallowing promising independent brands, is doing it again. The company is purchasing a controlling stake in Hinge, a seven-year-old company that has positioned itself as a counterbalance to the casual dating scene on Tinder, Match’s flagship product. Match will take a 51 percent stake, with the option to buy the remaining shares over the next year, according to both companies. Financial terms were not disclosed.
Hinge is the fifth-highest grossing dating iPhone app, according to the research firm App Annie. (Tinder has consistently been at the top of the list for years.) In its initial form, Hinge operated like Tinder, with users swiping left or right on photographs to express interest. When two people both said they were interested, the app would connect them. Users signed up through Facebook and, unlike Tinder, could only connect with people with whom they had at least one connection in common.
In late 2016, Hinge redesigned its product. It ditched the swiping interface in favor of more detailed profiles and other features tailored to people looking for relationships rather than hookups. It now uses Tinder fatigue as a primary selling point. “Goodbye swiping! On Hinge, every like is unique,” the app now greets its users. Following the product changes, Hinge’s user base quadrupled, and each user began going on more dates, according to Justin McLeod, its founder and chief executive officer. The company hasn’t released data about its user base. There is a free tier, and premium users pay between $5 and $13 for a monthly subscription.
Mandy Ginsberg, Match’s CEO, said that Hinge fills a gap in the company’s portfolio of dozens of dating brands by appealing to millennial users who learned to date on Tinder, then grew out of it. Match first invested in Hinge in September 2017, taking a seat on its board. Neither company made the relationship public at the time. They soon began discussing a potential acquisition, according to McLeod.
Match’s hunger for new brands is a well-known dynamic within online dating. The company’s tactics have come under scrutiny in recent months after it filed a patent lawsuit against Bumble, a dating app run by one of Tinder’s co-founders. Bumble filed its own suit in retaliation, revealing that it had been talking to Match about a potential acquisition, and arguing the lawsuit was an attempt to drive down the price. The litigation is ongoing.
The industry has also been shaken up recently by Facebook Inc.’s announcement that it is planning its own online dating service. Match shares dropped by 22 percent on the day of Facebook’s announcement, the worst single-day drop in its history. They have since recovered.
Around the same time, Facebook cut off the ability of apps like Hinge to access information about the friends of their users, in a response to concerns about how it shared data with third parties. This made Hinge’s initial method of sorting for mates technically impossible. It has recently begun allowing users to sign up with their phone numbers, avoiding Facebook altogether.
Ginsberg and McLeod both argue that Facebook isn’t as big of a threat as it seems. “Our demographic is millennials and they’re using Facebook less and less,” said McLeod. “I don’t see them as an up-and-coming brand that people are going to trust with their dating lives.”
In one final Facebook-related twist, the social network’s mock-ups of its dating app looked almost identical to Hinge. Facebook’s tendency to ape competing products can be a major threat to smaller companies; Snapchat’s recent troubles have been attributed in part to Facebook copying many of its features. For his part, McLeod said he was flattered. “It’s pretty clear people at Facebook have been using Hinge,” he said.
©2018 Bloomberg L.P.