Why Would Facebook Want to Buy BlackBerry?

A blog about business and economics.
Oct. 30 2013 12:51 PM

Facebook + BlackBerry = Technological Quagmire

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BlackBerry's market share in the U.S. dropped to a paltry 4.3 percent in July.

Photo by Justin Sullivan/Getty Images

Matthew Yglesias is on vacation.

The Wall Street Journal is reporting that BlackBerry executives met with Facebook to discuss potential bids for the ailing smartphone-maker. Strategically speaking, such a deal would give Facebook the ability to circumvent other manufacturers they rely on. The companies aren’t talking to the public, so whether a Facebook phone would use its own operating system, BlackBerry’s, or just base it off Android is unclear. The deal could be a significant market shakeup—in theory.

But why would Facebook want such a deal? Blackberry’s slide from grace has been going on for years, but September was a particularly bad month. The company announced it would lay off about 40 percent of its workforce, that it had lost $1 billion in the last quarter, and that it was backing off the consumer market to focus on businesses. Echoing this, T-Mobile stores have since stopped carrying BlackBerry smartphones.

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The market is pretty duopolistic, at least for now, and there’s not much reason for that to change in the short run. Windows Phone is fighting for third place in Europe—according to Engadget, it’s celebrating 10.8 percent market share in France and 12 percent in Britain. BlackBerry’s presence in Europe, meanwhile, shrank to a diminutive 2.4 percent in the five major European markets. BlackBerry’s market share in America fell to 4.3 percent in July.

Even were BlackBerry a good buy, it wouldn’t be a good fit for Facebook. Just over a year ago, Mark Zuckerberg said a Facebook phone "has always been the wrong strategy for us." Even if Zuckerberg has changed his mind about a Facebook phone, BlackBerry seems like the antithesis of what it would be looking for, especially with the company’s recent pivot back into its business-focused niche. Have you ever wanted to provide all of your employees with a phone centered on social networking?

Facebook would need to roll back a number of very recent BlackBerry decisions the moment it stepped through the door. Facebook also has significant work left to do with the existing markets: One recent study found that Facebook’s mobile ads have a vastly higher ROI on iOS than on Android.

All of this aside, BlackBerry is still a valuable company. The Wall Street Journal notes a number of assets owned by BlackBerry, including $2.6 billion in cash, no debt, and patents worth between $1 billion and $3 billion. And I’m also guessing Facebook will take note of another bit of BlackBerry news breaking today: BlackBerry’s messaging app picked up 20 million users across Android and iOS since its launch a week ago.

Still, BlackBerry as we’ve come to know it would be a quagmire for Facebook.

Sean Vitka holds a J.D. from Boston College Law School. He was a legal fellow at the Open Technology Institute and a Google Policy Fellow at Georgetown Law.