Facebook expands into customer service tools; Acquires US-based Kustomer

By Rahul Vaimal, Associate Editor
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Facebook has acquired customer service startup Kustomer, as the world’s largest social network based out of America adds tools to attract more sellers to its platforms.

US-based Kustomer helps companies to aggregate customer conversations into a single screen from multiple channels, and even to automate some of the responses to prospective buyers. The company has already incorporated its services into Facebook Messenger and Instagram.

Financial details of the deal were not disclosed but reports suggest that the transaction valued Kustomer at $1 billion.

Kustomer had raised around $174 million in private funding from investors that included Coatue, Tiger Global Management, Battery Ventures, Redpoint Ventures, Cisco Investments, Canaan Partners, Boldstart Ventures and Social Leverage. It was last valued at $710 million, according to data.

“Any business knows that when the phone rings, they need to answer it. Increasingly, texts and messages have become just as important as that phone call and businesses need to adapt,” Facebook executives wrote in a blog post. Kustomer also offers automated tools so companies can handle easier customer requests using bots.

Focus on customer service

As more businesses flock to the instant messaging app to address customer queries during the COVID-19 pandemic, the deal would also allow Facebook to scale up its WhatsApp Business service.

Facebook has made customer service on WhatsApp, the most popular messaging service in the world, a core part of its business strategy. It has signed agreements in India and Indonesia with commerce-related businesses and is working on a payment feature to be introduced in key markets such as Brazil. The hope is that companies will one day use WhatsApp as their go to platform, enabling customers to browse their product catalogs, make purchases, and interact directly with the businesses inside the app for all customer service needs.

WhatsApp currently makes money by charging large businesses to message customers on the app instead of email. Some customer service platforms, like Kustomer, use WhatsApp software to let businesses manage these interactions on a single interface.

Facebook has doubled down on its eCommerce push, betting that it would help generate fresh ad revenue as user growth slows. It launched Shops earlier this year which is a service that enables companies to display and sell products across the channels of Facebook.

It’s unclear whether regulators will take issue with the latest deal. Facebook is already under antitrust scrutiny for previous acquisitions, including its 2014 purchase of WhatsApp. Facebook executives said Kustomer will continue to operate the business as usual while the acquisition goes through regulatory review.