Brief:

• Facebook has reached an agreement to buy Kustomer, a startup focused on customer service technology and chatbots, the social media giant said in a Monday announcement. Terms of the takeover weren't disclosed, though people familiar with the deal said it valued Kustomer at $1 billion, The Wall Street Journal reported.
• Kustomer's platform provides a single-screen view of conversations between businesses and consumers among different channels — including phone, email, web chat and messaging — to help customer service agents minimize repetitive tasks. Facebook plans to support Kustomer's growth while also giving businesses a way to integrate their preferred customer relationship management (CRM) platform with Facebook's messaging services.
• The deal backs Facebook's focus on supporting businesses connecting with consumers through its apps and comes as the company reports that more than 175 million people a day contact businesses through WhatsApp. Kustomer's co-founders Brad Birnbaum and Jeremy Suriel, who sold a previous startup to Salesforce, will join Facebook when the deal closes after receiving regulatory approvals.

Insight:

The deal for Kustomer is the latest play by Facebook to better integrate messaging across its platforms and may help marketers — especially smaller businesses with fewer financial resources and technological know-how — to manage online conversations and improve their communications with customers. With millions of people using messaging apps to chat with businesses, as Facebook has observed on WhatsApp, companies need more ways to manage those conversations and automate them with chatbots.

Kustomer's own research found that 79% of consumers get frustrated when they can't contact customer service on their preferred medium or platform, but only 25% of customer service organizations currently use chat and 18% use chatbots. Businesses aren't adopting chat because they don't know where to start, have staffing or financial constraints, or think customers don't want to use the services.

If Facebook can make chat services as accessible to businesses as it has its self-service advertising platform, more companies are likely to adopt the technology, including retailers increasingly looking to reach shoppers online.

"As Facebook extends its efforts to bring commerce to its messaging channels like WhatsApp and Messenger, it needs to conform to the reality that conversations with the modern consumer take place across devices, channels and platforms," Kerel Cooper, senior vice president of global marketing at LiveIntent, said in a statement shared with sister publication Mobile Marketer.

Facebook already worked with Kustomer, giving businesses a way to gather and respond to customer questions sent through Facebook Messenger. Kustomer announced in October that it integrated its platform with Instagram Messaging, the chat service that's become a more prominent part of the Facebook-owned photo-sharing app. That same month, Facebook introduced a new application programming interface (API) for Messenger to help businesses manage communications through Instagram at scale.

The update to Messenger's API also let businesses that sell through Facebook Shops integrate Instagram messaging with their social media storefronts. Facebook in May introduced Facebook Shops to give small businesses a way to have online conversations with their customers through WhatsApp, Messenger and Instagram Direct messaging platforms amid early pandemic disruptions. The ongoing integration of Facebook's messaging apps comes as the company increases its push into e-commerce. Earlier in October, Instagram added shopping capabilities to Reels and IGTV, and in July debuted Instagram Shop as a hub for personalized recommendations, exclusive items and collections of products from brands and creators.

Facebook's planned acquisition comes as the company faces antitrust scrutiny for potentially anticompetitive business practices that have led to the suggestion that the company be forced to divest Instagram and WhatsApp. Facebook has argued against a possible breakup, stating that such an action would go against established law, harm customers and cost billions of dollars, The Wall Street Journal reported in October. There have been conflicting press reports on the timeline for the Federal Trade Commission to sue Facebook for alleged antitrust violations as authorities also investigate Apple, Amazon and Google. Facebook's proposed $400 million acquisition of Giphy, a platform for sharing video files known as GIFs, also faced review from antitrust authorities worldwide.