Acquisitions come in many shapes and sizes. There’s the WTF (Facebook buys WhatsApp for $22 billion), the Hindsight’s 20/20 (Google buys YouTube for $1.65 billion), and the You Played Yourself (AOL buys Time Warner for $182 billion), among others. No matter its rationality, a mega-buy is always exciting in the moment, sending journalists, investors, and competitors scrambling to make sense of the reshuffled business landscape. It’s the closest thing the tech world has to free agency.
But what if all the tech companies out there really were free agents? What if the titans of Silicon Valley (OK, and Seattle) could buy up any startup they wanted? What if the five most valuable tech companies in the world — Apple, Alphabet, Microsoft, Amazon, and Facebook — agreed to hold a draft?
They would never do such a thing, because of capitalism and freedom and antitrust laws and things like that. But economic realities didn’t stop me from spending an inordinate amount of time thinking about the potential acquisition strategies of these major companies and poring over the startups most ripe to sell out and bro down.
Ladies and gentlemen, I bring you: the Ultimate Fantasy Tech Draft.
First, some ground rules for the league:
- The draft has three rounds, with selection order determined by current market cap (the least valuable company, Facebook, gets to pick first).
- Each company has a salary cap of $50 billion. That means nobody can nab Uber, which is valued at $68 billion.
- The eligible free agents include all unicorns (tech startups valued above $1 billion) and any publicly traded company valued above $1 billion.
- Acquisition prices are determined by taking a company’s current market capitalization or private valuation and applying a 28 percent premium, which was the average acquisition markup in 2015 according to Bloomberg data.
- Chinese companies were excluded because the country’s regulators would likely bar an American tech giant from acquiring a promising domestic startup.
- Acquisitions that would likely run afoul of antitrust laws were excluded — so no, Apple probably can’t buy Spotify and essentially take over the music streaming market.
Round 1
Facebook Buys Snapchat for $23 Billion
Finally, sweet revenge! Snapchat famously looked silly for turning down a $3 billion buyout offer from Facebook when it was still an ephemeral sexting app. Facebook, in turn, looked way sillier trying to clone Snapchat again, and again, and again, while the startup accrued more and more users and reoriented the social media world — literally. Facebook wants to control all of our time and it wants to take over mobile video. Snapchat stands in the way of both of those goals. Mark Zuckerberg needs to go back to Snapchat CEO Evan Spiegel hat in hand and make a big offer, before the startup commits to the IPO it’s currently mulling.
Amazon Buys Sirius XM for $25.7 Billion
Amazon’s long-term viability is centered on recruiting more Prime members, who tend to buy way more products on the site than non-Prime customers. A Sirius XM satellite radio subscription would instantly become the biggest Prime selling point. The music and talk-radio service has more than 30 million paying subscribers in the United States — that’s probably more than Spotify and Apple Music combined, which had 45 million subscribers globally as of June 2016. While companies like Spotify and Pandora lose money, Sirius generates healthy profits. And unlike the much-talked-about music streaming services, Sirius has popular exclusive programming that will keep users paying every month, like Howard Stern’s show.
With a Sirius buy, Amazon could upgrade from the current lackluster streaming service in its Prime subscription (Sirius could also continue being sold separately). Amazon would have an immediate foothold in millions of connected cars, a new avenue to sell its products. And the streaming version of Sirius could be made exclusive to the Amazon Echo, boosting the appeal of the surprise hit product. Sirius is pricey, sure, but it’s the best music-related buy around.
Microsoft Buys Magic Leap for $5.8 Billion
In the race to build the ultimate virtual reality headset, Microsoft has opted to focus on mixed reality, which involves intermingling virtual objects right beside real ones in a person’s view. The secretive, Florida-based startup Magic Leap has the most advanced version of this tech, according to Wired. Bringing on the startup’s engineers could help Microsoft improve its own HoloLens. It would also be a strategic troll against Google, which has already invested heavily in Magic Leap.
Alphabet Buys Lyft for $7 Billion
Google has been working on self-driving cars for years and is thought to have the most advanced autonomous technology currently in development. Lyft could help the search giant actually put its tech to use with customers. The ridesharing service is already partnering with General Motors to build a fleet of self-driving taxis. Through a Lyft buy, Google would get access to a large customer base and executives who already have had success cozying up to traditional automakers. There’s no way Google can go it alone in the transportation sector, and Lyft would be a valuable partner in the simmering war against Uber.
Apple Buys Mobileye for $12.9 Billion
We know Apple wants to build a driverless car, but we don’t know much about Apple’s current prowess in regard to artificial intelligence and machine vision. If the company is looking to catch up to far-ahead competitors like Google quickly, snapping up Mobileye would make sense. The Israeli company develops software and cameras that help cars drive autonomously and already has plans to roll out a fully autonomous system by 2019. Apple’s meandering car project could likely use the jump-start a big acquisition would bring.
Round 2
Facebook Buys Stripe for $6.4 Billion
Facebook may know everything about our favorite movies, most treasured memories, and romantic relationships, but what the company really wants is our credit card numbers. Stripe, a digital payments startup that helps developers execute online transactions, could be the key to sucking up that data. Facebook has tried and failed to transform into a commerce platform before, through initiatives like Gifts and the Buy button. Stripe already has lucrative partnerships with American Express, Apple, and Facebook itself. Bringing Stripe entirely into the fold could allow Facebook-powered commerce to proliferate across the web, the same way the company’s share button and comment boxes pop up on millions of websites.
Amazon Buys Snapdeal for $8.3 Billion
While Amazon dominates e-commerce in the United States, it trails competitors in many Asian markets, such as India. By buying up the Indian e-tail site Snapdeal, Amazon would better be able to compete with market leader Flipkart, a domestic juggernaut. It’s possible Amazon would eventually crowd out both Flipkart and Snapdeal through a war of attrition, but an acquisition would save all parties involved a lot of time.
Microsoft Buys SpaceX for $15.4 Billion
Microsoft is still trying to figure out how to be an internet company. Well, one staple of that designation is a crazy-sounding hubristic scheme to beam internet access to every corner of the globe. SpaceX would fit the bill nicely. Elon Musk’s space exploration startup is famously shuttling celestial cargo for NASA, and the company also wants to launch a fleet of micro-satellites into space to make internet available the world over. (Also, SpaceX just accidentally blew up one of Facebook’s internet-beaming satellites, knocking out just a fraction of Microsoft’s theoretical competition.) If Microsoft really wants to bring professional networking on LinkedIn to the masses, this is the way to do it.
Alphabet Buys Veeva Systems for $7 Billion
Here, Alphabet has a chance to shore up two of its businesses at once. Verily, the company’s life sciences unit, wants to combine tech and medical talent to fight disease. Google Cloud Platform wants to bring cloud computing to businesses but is currently lagging behind rivals Amazon and Microsoft. Veeva Systems is a cloud computing platform specifically for pharmaceutical and life sciences companies. Google expands its cloud business, grows its connections in the medical industry, and eventually cures cancer or something. Win-win-win.
Apple Buys GoPro for $2.2 Billion
As per usual, Apple plans to arrive fashionably late to the virtual reality party. GoPro could be a nice date to bring along. The company known for its action cameras currently is making the classic Silicon Valley pivot to focus on VR. This year GoPro rolled out a $5,000 virtual reality camera rig, a live VR channel, and special VR video editing software. It’s an entire virtual reality ecosystem, and if there’s one company that loves ecosystems …
Round 3
Facebook Buys Yelp for $3.7 Billion
Facebook knows a lot about people (or does it?), but it knows considerably less about places. By purchasing Yelp, Facebook would get access to tons of data about the most liked and despised businesses in cities around the world. It’s easy to imagine how Yelp data would help improve M, Facebook’s forthcoming digital assistant. And tighter Facebook integration would likely compel more people to leave business reviews. In the war against Google to control information on the web, Yelp would be a useful weapon.
Amazon Buys Blue Apron for $2.6 Billion
Amazon got us to buy books, then clothes, then detergent online instead of in a physical store. But buying food on the internet still feels strange, and the company’s grocery delivery service AmazonFresh has expanded at a glacial pace. Blue Apron, which delivers pre-made, ready-to-cook meals to hungry customers, could be an effective bridge to get customers comfortable with the idea of uncooked food arriving on their doorstep. Amazon will give the meal-kit delivery game a go independently first, but if it fails to catch on, the already-popular Blue Apron would be a smart buy.
Microsoft Buys Slack for $4.9 Billion
The company out to kill Outlook should be bought by the company that birthed the monstrosity that is Outlook. Microsoft is lumbering toward creating office tools that are mobile-friendly and easy to use. Slack’s already there with its powerful chat app for businesses. Buy this company up while it’s still relatively small, let it keep innovating as an independent brand, and let it build a slackbot that offers lessons on Excel.
Alphabet Buys Twitter for $16.4 Billion
Google’s last successful foray into helping people communicate was 12 years ago, with Gmail. Since then the company has bumbled through a variety of messaging apps, social networks, video-calling services, and confusing hybrids of all three. For all its idiosyncrasies, Twitter has been around long enough to be understood by millions of people. Despite the doom and gloom around the company, it is popular, with more than 300 million users. And its role as a sort of real-time search engine would complement Google’s central mission as a provider of vital information as well.
Apple Buys Viacom for $19.3 Billion
Apple’s flagship devices — the iPhone, the iPad, the Apple TV — are largely similar in form and feature set to products offered by competitors. The way for Apple to differentiate itself in the future is through services, and the way to differentiate its services is through exclusive content. That’s why Apple should buy Viacom, which is a bargain right now due to declining ratings on its networks and a crazy Game of Thrones–esque power struggle for control of the company. Apple could continue to operate Viacom’s traditional television networks, which include Nickelodeon, Comedy Central, and MTV, while funneling its programming to an Apple-exclusive streaming service tailored to the Apple TV and the iPhone. Cord-cutters who wanted to watch Broad City or SpongeBob would have to buy Apple. We already know Apple is mulling a big bet on content because the company was in talks to buy Time Warner earlier this year. Viacom is a much cheaper bet that offers many of the same benefits. Shoot your shot, Tim Cook.