Facebook to acquire startup Kustomer amid antitrust glare

SAN FRANCISCO >> Facebook is facing the glare of regulators for buying up promising startups and neutralizing them as a competitive threat. But that hasn’t stopped the social network from shelling out for more companies.

Facebook announced Monday it planned to acquire Kustomer, a customer relationship management startup, to help it build its e- commerce business. The deal values Kustomer at close to $1 billion, said two people with knowledge of the talks. Kustomer, which is based in New York, had raised roughly $170 million in venture funding, according to data compiled by Crunchbase.

The deal, which is subject to regulatory approval, could provide businesses and customers more support for interactions that occur on Facebook and its other apps, such as WhatsApp, Instagram and Facebook Messenger. More than 175 million people contact businesses using WhatsApp, Facebook said.

“Messaging provides a better overall customer experience and drives sales for businesses,” Dan Levy and Matt Idema, executives at Facebook and WhatsApp, said in a company blog post.

Facebook announced the deal even as the Federal Trade Commission and dozens of states prepare antitrust lawsuits against the company for maintaining its power through past mergers of nascent competitors. The FTC and state attorneys general are expected to announce plans for legal action against the social network within days, several people briefed on the cases have said.

The cases are likely to focus on how Facebook came to dominate social media through its $1 billion acquisition of Instagram in 2012 and its $18 billion purchase of WhatsApp in 2014, they said. The companies were not directly competing with Facebook at the time.

A Facebook spokesman said there remains plenty of competition in technology, especially as Kustomer is not a social networking app and is adjacent to the social network’s main business.