Jun 23, 2017

Snap Is Probably Terrified of Facebook -- Here's the Latest Way You Can Tell

Snap Inc. (SNAP) may have found a new way to keep users from venturing off of its platform to Facebook Inc.'s (FB) Instagram. 

On Wednesday, the Snapchat parent company introduced a new feature called Snap Map that allows users to share their location with friends on the app. Each user's location shows up on the map as an icon represented by their "ActionMoji" Bitmoji, which can be clicked on to show each user's Story. Bitmojis are the personalized, cartoon avatars that came as a result of Snap's $100 million acquisition of Bitmoji maker Bitstrips in 2016. 

Snap Map was also built from an acquisition. In late March, Snap scooped up mapping startup Zenly for $200 million in mostly cash and stock, Bloomberg reported, citing sources close to the matter. Zenly's GPS tracking/location sharing technology was used to build the maps in Snap's new product, which rolled out to all iOS and Android users on Wednesday.

Shares of Snap closed up 2.1% to $17.64 on Thursday. The stock has fallen about 28% since its March IPO, however, as Wall Street has continued to raise concerns about its slowing user growth and lack of profitability. 

The social media upstart has proven that it will make acquihires or bolt-on acquisitions in order to get its hands on valuable technologies. Or as Niv Dror, a social editor at app discovery engine Product Hunt, noted, Snap knows "when to acquire and when to build." This strategy mirrors that of other Silicon Valley tech giants, such as Amazon Inc. (AMZN) , which is known for its "build first, buy second" approach to deals. 

Jack Brody, a product designer at Snap, told Refinery29 that users had been asking for a feature to help them connect with their friends outside the app. "This is about layering relationships [with friends] on top of what is happening in the world," Brody said.

Snap Map also shows Stories that correspond with tagged geotags, which can allow users to quickly discover breaking news that's nearby or around the world. Brody likened the feature to how users get breaking news on Twitter Inc. (TWTR) . 

Outside of the breaking news features, Snap Map is mostly meant to serve as a fun way to interact with friends, which is something the company has become really good at, said Loup Ventures analyst Doug Clinton. Snap has also zeroed in on creative products as one of its biggest strategies to fighting off increasing competition from Instagram. CEO Evan Spiegel detailed this idea on the company's earnings call in May. 

"I think if there's one thing that I'd want to communicate today, it's probably just the overall importance of creativity to our business," Spiegel told investors on the call. "And I mean this from every perspective, right from the team that we hire, to how they work together, the creative culture we have, the products that inspire people to create." 

Facebook has become more of a utility, while Instagram is mostly made up of curated posts, Clinton said. Snapchat, meanwhile, has been able to carve out its own niche in the social media space by building products that are fun and lighthearted, he added. It's part of the reason why Snap's primary user demographic is between the ages of 16- to 25-year-olds. 

"Aside from being a camera company...Snap is also a fun company," Clinton explained. "Spectacles are so much more fun than HoloLens or Google Glass and I think that's exactly what Bitmoji is. It brings a more lighthearted element to Snapchat."

Snap Maps may also give the company a leg up in another way. The product could be a key tool in helping Snap broaden its augmented reality tools beyond just filters and lenses. Snap wants to own the AR operating System, Clinton said, and maps is a big piece of the technology's future. All the big AR players like Apple Inc. (AAPL) , Alphabet Inc.'s (GOOGL) Google and Microsoft Inc. (MSFT) have their own AR-powered mapping solutions, so Snap Maps could be a way for the company to throw its hat in the ring. 

"This gives them a real play, in terms of bringing location into the AR future that we see for them," Clinton said.


The Street

by Annie Palmer