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The news that Yahoo has bought Tumblr sent waves across the web as people tried to figure out how it would affect them. Like most startup sales there has been heated discussion about whether this sale is a “good” or a “bad” thing.
But based on the recent history of startups, it is clear smaller companies start somewhere with the hopes of catching the attention of online giants.
Google bought YouTube in 2006. Microsoft bought Skype in 2011. Facebook bought Instagram last year. These are just a few of hundreds (thousands?) of sales between small and big dotcom companies.
For people like Tumblr creator David Carp, joining the big league is a dream come true. When he made the announcement on the Tumblr staff blog he was clearly elated, even signing off with a victory cry of “f**k yeah”.
For Karp and co., the news is a huge win – they just hit the jackpot all startup companies hope for. But even through his fist-pumping excitement at the reported US$1.1 billion deal, Karp realised the rest of the internet could be concerned by Tumblr’s sale to a giant like Yahoo.
“Before touching on how awesome this is, let me try to allay any concerns: We’re not turning purple. Our headquarters isn’t moving. Our team isn’t changing. Our roadmap isn’t changing. And our mission – to empower creators to make their best work and get it in front of the audience they deserve – certainly isn’t changing,” he wrote.
“So what’s new? Simply, Tumblr gets better faster. The work ahead of us remains the same – and we still have a long way to go! – but with more resources to draw from.”
The impact of startup sales
So is there a need for Karp to allay concerns? Aside from being worth billions of dollars, do any of these sales make a difference to the online experience?
The short answer is yes. As many media sources have already pointed out, the sale of startups does not have a good track record for customers. The Independent, in particular, has been scathing of this latest deal, publishing an article entitled How to say ‘I’m a sellout’. “…Karp’s defence of his high-profile sell-out isn’t the first to get sideways glances,” reporter Jamie Merrill argues.
Merrill then details comparable sales of smaller companies that have soon ended up in the hands of industry giants with completely different agendas, particularly when it comes to ethics.
The sale of The Body Shop to L’Oreal, for example, brought up concerns of animal testing, which the latter cosmetic giant was still reported to be practising.
Similarly, when independent ice cream makers Ben Cohen and Jerry Greenfield sold most of their shares in Ben & Jerry’s it was to Unilever, a firm “criticised by environmentalists for hot cycles of greenwashing and using palm oil linked to deforestation [Unilever has since pledged to make its palm oil supplies sustainable].”
Closer to home for the Tumblr sale is the example of Facebook’s takeover of social photo app Instagram. “When David Karp announced he was going to sell his social media website Tumblr to Yahoo for $1.1bn earlier this week, some of the site’s tribally loyal users took to the web to warn against an Instagram-style grab of their copyright rights and personal information,” Merrill wrote.
The similarities between Instagram’s sale and Tumblr’s are hard to miss. Like Karp, Instagram developer Kevin Systrom was also quick to state the deal with Facebook would make the service better. But as his in-depth interview in Vanity Fair highlighted, he was also aware of the risk of “selling out”. And then Facebook tried to do all kinds of things to the copyright and user service agreements outlined by Instagram for users.That blatant manipulation of a small company by its new, giant owner brings up another issue: how these sales affect users.
For senior writer at tech and business blog GigaOM David Meyer, the real worry with startup sales to internet behemoths is that it will disempower everyone else. “At this stage in the game, these companies are playing by different rules to everyone else…customers are not customers: instead, they are users,” he wrote, going on to look at different ways online monopoly could affect how people experience the web.
“What we’re seeing here is a reduction in competition and variety, the concentration of wealth in the hands of a few giants, and the rise of players so big as to feel untouchable. The lack of genuine customer service mentioned at the start of this article is both symptomatic of this situation and one of its many drivers,” he said.
On the one hand, these dotcom companies are buying out competition and making huge profits in the process. But on the other hand, there are people using these services who may not even be able to talk to a real person in the company about any problems they experience.
The example of customer service applies to other elements of the online experience as well. Companies can decide what to do with their privacy policies at their own whim, or how they develop different apps and layouts for their sites and services.
Meyer has brought these concerns to the forefront of discussion and, while he doesn’t have a solution, he does suggest a way forward. “Perhaps it’s time to aim for a wider evaluation of what’s going on here. It’s not about being positive or negative. It’s about making sure that the massive societal changes this industry is effecting work out for the benefit of society as a whole.”
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