Facebook Is Forming a VC Arm

Facebook is building a corporate VC arm within its New Product Experimentation team, Axios reported yesterday. It’s another weapon in FB’s arsenal of tactics to address would-be competitors:

• Power of the purse: FB paid $19 billion for WhatsApp, $2 billion for Oculus, and $1 billion for Instagram. If you can't beat ’em, bring them into the family.
• Copy and paste: FB's R&D lab is named Snapchat, as the joke goes.
• Eyes on the prize: FB reportedly used the Onavo VPN app to spy on users and see which apps they were using most frequently.

Antitrust scrutiny makes the purse tactic more difficult, while copying has become less effective over time (see FB's attempts to clone TikTok). But trendspotting still works: With FB’s recent acquisition of Giphy, the company can 1) analyze sharing trends for GIFs, the language of the youth, and 2) monitor API requests to see up-and-coming apps.

Big picture: Along with investment opportunities, corporate venture arms allow for visibility into new technology and startup trends.