Facebook Buys Customer-Service Software Maker Kustomer
The logo for Facebook is displayed on a smartphone. (Photographer: Gabby Jones/Bloomberg)

Facebook Buys Customer-Service Software Maker Kustomer

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Facebook Inc. has acquired Kustomer Inc., a New York-based software company that helps businesses manage customer conversations from multiple services on one dashboard.

The deal was valued at more than $1 billion, said a person familiar with the deal who asked not to be identified because the terms were private.

The social media giant made the deal to bolster efforts to monetize its messaging business, which is expanding to include customer-service products that help companies interact with people via chat apps, like WhatsApp and Messenger.

“Any business knows that when the phone rings, they need to answer it. Increasingly, texts and messages have become just as important as that phone call -- and businesses need to adapt,” Facebook executives wrote in a blog post. Kustomer also offers automated tools so companies can handle easier customer requests using bots.

Facebook has made customer service a central part of its business strategy on WhatsApp, the world’s most popular messaging service. It has signed deals with commerce-related businesses in India and Indonesia, and is working on a payments feature to launch in key markets such as Brazil. The hope is that businesses will one day use WhatsApp as their de facto website, allowing customers to browse their product catalogs, make purchases and interact directly with the companies for customer service needs all inside the app.

WhatsApp currently makes money by charging large businesses to message customers on the app in lieu of email. Some customer service platforms, like Kustomer, use WhatsApp software to let businesses manage these interactions on a single interface. Facebook executives said Kustomer will continue to operate the business as usual while the acquisition goes through regulatory review.

It’s unclear whether regulators will take issue with the deal. Facebook is already under antitrust scrutiny for previous acquisitions, including its 2014 purchase of WhatsApp. Competing customer service businesses will still be able to offer WhatsApp corporate messaging even though Facebook will now own one of those tools itself, according to WhatsApp Chief Operating Officer Matt Idema.

“This is a big space,” Idema said. “This is adding a tool for a specific segment but we want to continue to enable to whole market.” Kustomer, which has more than 200 employees, works best with businesses that need 20 to 100 customer service agents, Idema added.

Facebook didn’t disclose terms of the acquisition and a spokesperson for the company declined to comment. The value was reported earlier by the Wall Street Journal.

Kustomer was advised on the deal by JPMorgan Chase & Co.

©2020 Bloomberg L.P.

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