A sale of Facebook’s “Wonderdraft” assets in a $100 billion deal with private equity firm Bain Capital has sparked criticism from critics who say it’s a thinly veiled attempt to profit off the site’s success.
“WonderDraft is just another way Facebook will make money from people who were not paying attention to the real problem,” says Adam Weisburd, a professor of computer science at Princeton University and an outspoken critic of Facebook.
“There is no ‘problem’ with this sale,” Weisbel adds.
Weisblad also says the sale is part of Facebooks efforts to make the platform more accessible to the outside world, and that “people are still learning how to use Facebook”.
But Weisbet says the money will go to “a very few people”.
The sale is a rare example of a Facebook deal that has gone public after only a handful of investors.
“I don’t think there’s much money to be made in it.
It’s a pretty tiny number,” Weiseblad says.
“We’re getting a handful [of investors] with a very limited amount of money, and we don’t see any indication of any growth going on with the company.”
He says Facebook’s acquisition of Wonderdraft is part-and-parcel of a broader strategy to create a new company in the social media industry, and has been the subject of much criticism.
“It’s really difficult to do this,” Weisesburd says.
Bain’s Bain Capital bought the assets from Facebook in 2014 for a total value of $25 billion, but it was never able to sell the site.
Bain said the sale, if successful, would give Facebook “the ability to expand its business into new areas” like mobile and video.
Bain Capital said in a statement that the deal was a “comprehensive, strategic and transformative asset sale” that was “designed to enhance Facebook’s long-term business and accelerate growth”.
It added that the acquisition would enable Facebook to “ensure the continued success of our core businesses and to accelerate growth in areas like video, advertising and content”.
Weisbeats the notion that the sale was part of a larger strategy to monetise the platform, or the idea that Facebook was selling off the assets to fund its expansion.
“The sale of the ‘WonderDraft’ assets is not a part of any larger strategy for monetising Facebook,” he says.
Weisesbet says Facebook isn’t selling the assets at the expense of its own stock price.
Instead, the money is being used to pay for “internal acquisitions” that Facebook is currently using to “build and improve its core business”.
He says that is not “the kind of strategy that is going to drive a company that has a $200 billion market cap”.
The company also has “huge amounts of cash and assets” in its “golden parachute” account, he says, but that money will “be used to build a new social platform that’s going to help Facebook reach a billion people”.
Weisesbeats criticism that the purchase of WonderDraft assets will be used to fund the growth of Facebook as it attempts to grow from a tiny, niche platform to a billion users a year.
“You’re buying a small number of assets and they’re going to be used for a very long time,” he argues.
“They’re not going to go anywhere.”
But Weisesbel argues that the idea of selling the WonderDrafts is “absolutely wrong” and that Facebook has “never” done this.
He also says that Bain is a private equity investment firm that “has never made investments in a publicly traded company” and he thinks that Bain “doesn’t need to do that”.
“I’m really disappointed that Bain Capital took this deal,” Weissburd concludes.
The deal was first reported by Reuters, which said that Facebook will pay Bain “a combined $25.5bn to buy Facebook’s majority stake in WonderDraft, plus $20bn in debt”.
The Wall Street Journal said the deal would see Bain invest in the “social media company and expand into video, video, content and more content”.
The deal has attracted scrutiny in the media, with some analysts saying it will not be good for Facebook.
But Weisfsbel says the company is doing “a fantastic job” of managing the sale.
Facebook’s stock price has plummeted over the past year, falling by 30% from its IPO price of $39 a share.
The company’s shares were down by more than 50% in the past two years, and its valuation has fallen by more.
The sale of WonderDRAFT assets has raised questions about the viability of the Facebook brand.
It has become the subject to a series of scathing articles from media and tech critics who have accused the company of using the company’s success to generate revenue.
Critics have also suggested that Facebook’s growth is largely driven by a strategy to make its users more likely to engage with