Why Facebook Won’t Buy Loopt

Sam Altman

[credit provider=”Eng1ne via Flickr” url=”http://www.flickr.com/photos/eng1ne/3363925535/”]

As Facebook tries to figure out its strategy for mobile and location-based services, it has sniffed around location-based mobile service Loopt.Sources close to the companies categorize the talks as casual and describe last night’s TechCrunch article about a potential deal as much ado about nothing.

Everyone talks to everyone in Silicon Valley, so discussions between the company should come as no surprise. (Apple talked to Twitter, remember?)

For several reasons, however, we don’t think Facebook will acquire Loopt.

Why not?

  • Facebook would have no reason to buy Loopt for its userbase or iPhone app. Facebook already has a gigantic userbase — 400 million users worldwide. And the Facebook iPhone app has 28 million monthly active users, according to its app page. Loopt is much smaller.
  • Loopt will probably not come cheap — not cheap enough to be considered for an “acq-hire,” in which Facebook would be buying Loopt for its personnel. The company has raised $17 million, according to CrunchBase, and its investors, including Sequoia Capital, will be looking for a return. (And probably won’t want a bunch of Facebook stock.)
  • Loopt’s technology assets that generate revenue — its location services back-end and services for mobile carriers — are not things that Facebook would have any business owning. Facebook’s iPhone app would do just fine using the location services that Apple built into the iPhone.

So, while a potentially interesting combination, we think we’ve heard the last of this one.