Yahoo Said To Buy Mobile Startup MessageMe, Ups Product Development

Continuing its mobile push, Yahoo has acquired mobile messaging startup MessageMe and per reports, is close to taking a stake in better-known messaging brand Snapchat.

The MessageMe deal is the latest in a long line of “acqui-hires” Yahoo has done in the last two years to bring in engineering talent to speed up product development. The team behind the MessageMe app will likely focus on building a messaging app, “Yahoo Instant,” at the Web portal, according to a TechCrunch report.

The Wall Street Journal separately reported on Friday that Yahoo is in talks with Snapchat about an investment in the company’s next funding round that would value Snapchat at $10 billion, citing sources familiar with the matter. It’s not clear exactly how big a stake Yahoo would take in Snapchat.



Yahoo confirmed the MessageMe acquisition Friday evening, issuing the following statement: “The team behind MessageMe has joined Yahoo. They built a mobile messenger application focused on personalization and creativity, and we’re excited to welcome the eight MessageMe employees to the Yahoo team.”

Yahoo declined to comment on the report of investment talks with Snapchat.

With the $5 billion windfall from its sale of part of its stake in Chinese e-commerce giant Alibaba, Yahoo has a bigger war chest than ever to make acquisitions and strategic investments. At the same time, the company is under increasing external pressure to do a big deal to jumpstart growth. Activist investor Starboard Value LP last week took a stake in Yahoo, exhorting the company to pursue a potential merger with AOL.

Outside of the $1.1 billion acquisition of Tumblr last year, most of the more than 40 deals Yahoo has done during CEO Marissa Mayer’s tenure have been much smaller, mostly to acquire talent and technology. During an Advertising Week keynote talk on Thursday, Mayer didn’t offer any insight on a possible combination with AOL, but did reiterate the company’s focus on mobile as a key focus, along with areas like video and native advertising.

Yahoo already has its own mobile messaging product — Yahoo Messenger — an extension of its desktop IM offering, but it’s likely to be overhauled or replaced in the wake of the MessageMe acquisition. The company’s app has a 4.5-star rating in the App Store, based on nearly 3,400 ratings, compared to a 1.5-star rating for Yahoo Messenger (1,333 ratings).

A separate report on Friday indicated that Google is building its own messaging app to be launched next year, with testing taking place initially in India and emerging markets. Snapchat last year reportedly passed on offers of $3 billion and $4 billion, respectively, from Facebook and Google, holding out for the larger valuation it appears to have achieved. 

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