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Yahoo announces acquisition of Tumblr

As Minnesota residents might have heard, Yahoo announced Monday that it plans to buy microblogging platform Tumblr for $1.1 billion.

News of the acquisition was met with some positivity, but also some head-scratching and, from Tumblr users in particular, some outright negativity.

Some people applauded what seemed to be a newfound audacity on the part of Yahoo. Until now, Yahoo has not been very aggressive and it seems its public profile and performance have suffered because of it. (After all, when was the last time Yahoo was in the news for something other than hiring Marissa Mayer as CEO?) They also noted that Yahoo is acquiring an "in" to a large population of young Internet users, who comprise most valuable demographic.

Some industry observers, though, thought Yahoo was overpaying for a company that might not be an asset. They point out that Tumblr has never made money and that social media trends come and go (remember Friendster?), so by the time Tumblr is ready to contribute to Yahoo, it might be passé.

Finally, some Tumblr users have reacted violently to the news. Tumblr has something of its own unique character and cache, and there seems to be significant fear that Yahoo's ownership will change those things in a negative way.

This $1.1 billion deal is one of the larger acquisitions announced in recent memory, so as you can imagine, we will not be the only ones watching closely to see what develops here. We anticipate that other companies considering making big purchases are thoughtfully observing the situation, too.

Source: Reuters, "Yahoo buying Tumblr for $1.1. billion, vows not to screw it up," Alexi Oreskovic and Jennifer Saba, May 20, 2013

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