US-based microblogging platform Tumblr is remaining tight-lipped about its $1.1 billion acquisition by Yahoo!, but is already facing user backlash amid concerns Yahoo! will damage or even destroy the Tumblr platform.
According to a report by The Wall Street Journal, the Yahoo! Inc board has approved a deal to buy Tumblr for $1.1 billion in cash, although neither company has commented on the deal.
However, Yahoo! is expected to hold a press conference in Manhattan tomorrow to “share something special”, suggesting the company will announce the news then.
Yahoo!’s acquisition of Tumblr marks the largest deal overseen by chief executive Marissa Mayer, who took the helm of the struggling company in July last year.
Tumblr, founded in February 2007 by David Karp, is a microblogging platform and social networking website, allowing users to post multimedia and other content to a short-form blog.
Short-form blogs are also known as tumblelogs, hence the name “Tumblr”.
Karp began developing Tumblr in 2006 after growing tired of waiting for one of the established blogging platforms to introduce its own tumblelogging platform.
Within two weeks of launching, the service had gained 75,000 users. As of May 2013, Tumblr had more than 108 million blogs. The business remains based in New York City.
It’s understood the acquisition of Tumblr will boost Yahoo!’s “cool factor” because of its younger user base.
But it seems many Tumblr users are unhappy about the deal, taking to Twitter to vent their frustration.
One user wrote: “all I can do is watching (sic) how #tumblr goes down..#RIPTumblr” while another wrote: “#Yahoo’s track record with acquisitions hasn’t been inspiring. They’ve promised to leave #Tumblr alone – will they stick to this promise?”
Photo-sharing platform Instagram faced a similar level of user backlash following its acquisition by Facebook in April last year.
But Tumblr’s users aren’t the only ones concerned about the deal, with a Yahoo! executive describing the younger demographic as “a very fickle audience”.
Foad Fadaghi, research director of analyst firm Telsyte, told StartupSmart Yahoo!’s acquisition of Tumblr is a continuation of its acquisition strategy under Mayer’s leadership.
“They’re been constantly buying businesses for the last few months. I think this is a continuation of it,” Fadaghi says.
“It’s about tapping into the user-generated content, social media kind of space… [Yahoo!] seems to be a little bit behind in that.”
But Fadaghi says it would be unwise for Yahoo! to radically change the Tumblr platform.
“It depends on how they run it. I think their indication is they won’t integrate it – it will be left to run as a standalone business. I think that’s probably the best strategy,” he says.
Reports by All Things Digital suggest Yahoo! will take a hands-off approach to Tumblr, at least for the first few years.
As part of the deal, Karp will stay at Yahoo! for four years and retain “a lot of control” over the service, wrote AllThingsD.com.
This article first appeared on StartupSmart.