Taboola-Outbrain merger fails (Google and Facebook enjoy)
A year after the announcement of the merger, the talks between the digital advertising platforms Taboola and Outbrain have vanished: challenge postponed to Google and Facebook?
Google and Facebook can sleep peacefully, for now they remain leaders in the digital advertising market.
Taboola's deal to acquire rival Outbrain was canceled. The Wall Street Journal reported this, citing sources aware of the dossier.
Taboola and Outbrain, startups that each provide publishers with ad-based content referral / advice platforms, canceled the planned $ 850 million merger that would have valued the merged company at more than $ 2 billion.
The companies announced the merger in October 2019 , saying that together they would reach 2 billion people per month. The new combined company would offer advertisers a "meaningful choice" outside of the "walled gardens" of Facebook and Google, which dominate the digital advertising ecosystem.
The talks concluded after the two companies failed to agree on the terms of the deal.
While the US and German authorities had approved the deal, there was still no antitrust approval in Israel and the UK.
All the details.
WHAT TABOOLA AND OUTBRAIN DO
Taboola and Outbrain generate the “promoted stories” or “around the web” sections positioned at the bottom of the web articles.
To understand this, it is the companies that place the widgets with titles like "8 celebrities who live in Malibu" or "Here's how to make pimples disappear forever", generating revenue for the publishers of the websites where they appear. They also offer traditional web ads.
As TechCrunch recalls, the deal had taken years of work – the first talks dating back to 2015 – but it was concluded only about 11 months ago, in October 2019. However, since then, a combination of factors have intervened.
THE AGREEMENT FOR THE MERGER
The two companies, both founded in Israel but headquartered in New York, had described their planned deal as a merger. In reality, the final company would be called Taboola, with Taboola founder Adam Singolda holding the role of CEO.
Under the agreement, Outbrain shareholders were to receive $ 250 million in cash, more than 30 percent of the merged company's stock.
THE BACKLIGHT OF THE PANDEMIC
A person briefed on the deal said Taboola sought to renegotiate the deal as the coronavirus pandemic affected each company's business.
As we said, the activities of Taboola and Outbrain are based on widgets placed on the websites of publishers.
But in the past eight months, the world of ad-based media has taken a nosedive. Many big brands have in fact curbed their advertising budgets and this has had a ripple effect on other players within the ecosystem.
LOOKING FOR BETTER FINANCIAL CONDITIONS
Not only. According to a source, Taboola tried to change the terms of the deal and pay less than half of the 2019 terms. But this time the companies failed to reach an agreement, thus ending the talks.
REGULATORY ASPECTS
Finally, the regulatory question should not be overlooked. The two companies operate in content reporting and are fierce competitors. One of the reasons the merger has not yet happened is the long wait for approvals from antitrust authorities around the world. The deal was approved in the US and Germany, but not in Israel and the UK.
In the UK, the companies currently have no significant competitors, raising antitrust concerns.
CELEBRATE GOOGLE AND FACEBOOK
With the non-merger of Taboola and Outbrain, the duopoly of Google and Facebook in the digital ad market remains intact.
In recent years the two companies have faced the same threat by addressing many concerns in the media market. The duopoly formed by Big G and Mark Zuckerberg's behemoth has taken the online advertising content industry by storm.
In reality, Google and Facebook have indirectly entered the field of content recommendations but both (mainly Facebook) are making great efforts to form alliances with communications companies.
Google and Facebook want to keep users within their platforms so that they are the ones who show them all ads. To do this, they have developed ad hoc tools that allow them to benefit from two directions: users consume the content of their favorite suppliers, but still remain within the Google or Facebook platform.
Facebook claims to have 2.6 billion monthly active users as of April 2020. Google says its Display Network reaches 90% of people on the internet.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/fallisce-la-fusione-taboola-outbrain-google-e-facebook-godono/ on Wed, 09 Sep 2020 13:30:21 +0000.