Facebook Agrees To Acquire $1B Startup Kustomer To Improve Services For Businesses

Facebook Inc FB said Monday it has agreed to purchase Kustomer, an omnichannel customer relationship management company that develops solutions such as interactive chatbots.

What Happened: The Mark Zuckerberg-led social media giant said in a statement that its goal in acquiring the New York-based Kustomer was to give businesses access to tools that “deliver excellent service and support.”

Kustomer said in a statement that businesses would continue to own the data that is generated from interactions with customers but Facebook eventually expects to host the data. 

“While Facebook will not automatically use Kustomer data to inform the ads that a user sees, businesses will have the option to use their data at Kustomer for their own marketing purposes, which may include separate advertising services on Facebook,” Kustomer said.

The CRM startup is valued at a little over $1 billion, people familiar with the matter told the Wall Street Journal, which earlier reported the news.

Why It Matters: Facebook said it was witness to a shift in how people contact businesses with more than 175 million people using the company’s WhatsApp messenger for that purpose.

Kustomer has a pre-existing relationship with the social media behemoth as it allows companies to interact with their customers through Facebook Messenger. In October, it also started offering Instagram messaging integration, as per the Journal.

The Menlo Park-based social media giant has been expanding its e-commerce offerings this year. In August, it added a shop feature to its various apps.

Last month, Facebook Chief Operating Officer Sheryl Sandberg revealed that 40 million people view a business catalog each month on WhatsApp.

Sandberg said that the company would enable “click a WhatsApp icon on a Facebook Shop to chat directly with the business.” 

Price Action: Facebook shares closed 0.3% lower at $276.97 on Monday and gained 0.52% in the after-hours session.