A new Facebook online dating service has been announced by CEO Mark Zuckerberg, causing the online dating industry to undergo a major shake-up.
Rival dating firm Match Group (NASDAQ:MTCH) already dominates the online dating space. Yet Facebook’s (NASDAQ:FB) step into the industry has caused stocks in the rival firm to plummet -22%. Clearly, investors are skeptical of the ability of smaller companies to compete against Facebook, being the behemoth that it is.
The thing is, Match is hardly small. In fact, it essentially owns a monopoly over online dating. Popular apps and services such as Tinder, PlentyOfFish, OkCupid, and Match.com are all owned and operated by Match Group, which itself has a market cap of just over $10 billion USD. Though this figure was a fair bit higher yesterday before Facebook played its card. According to a Reuters report, Match and its parent company IAC lost $5 billion from their combined market values in a day.
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Unsurprisingly, Match hastily readied a snarky statement in response to Facebook’s announcement. “We’re surprised at the timing given the amount of personal and sensitive data that comes with this territory,” said Match CEO Mandy Ginsberg in reference to the data scandal in which Facebook is currently involved. Similarly, IAC CEO Jeoy Levin said to Facebook: “Come on in. The water’s warm,” adding that “their product could be great for US/Russia relationships,” referencing accusations that Facebook served as a platform for Russian political corruption.
It’s understandable for Match to be a little sore at Facebook’s move. After all, Tinder, which Match owns, relies heavily on Facebook to work; Tinder users have to sign in to Facebook in order to supply their photos to the app in the first place.
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To be fair to Facebook, they are in a prime position to try a dating service. Facebook has over 2 billion users, 200 million of which describe themselves as single, said CEO Mark Zuckerberg at Facebook’s annual F8 development conference. “Clearly, there’s something to do here,” he continued.
Facebook stocks are up 1.86% today, and continued climbing a little further in after hours trading. The firm’s market cap is now over $500 billion USD. The company’s share value has been steadily rising through April after plunging in March over public outcry at how the service handles – or mishandles – user data.
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Featured image: Makeuseof.com
