Facebook, Inc. (NASDAQ:FB) is in the process of acquiring Kustomer, a customer relationship management startup valued at close to $1 billion. Based in New York, the CRM startup has raised close to $170 million in venture funding.

Kustomer CRM Edge

The acquisition will allow the networking giant to provide businesses and customer’s support for customer interactions in its flagship and other apps. More than 175 million people contact businesses on Facebook apps led by the likes of Facebook, Instagram, and WhatsApp.

The deal is all about providing better products for customers. Founded in 2010, Kustomer has gone on to simplify the back end of software used by many Fortune 500 companies. The company has already presented itself as an alternative to traditional customer service software companies.

A merger with Facebook should help Kustomer support millions of business conversations, most of which take place on Facebook, WhatsApp, Instagram, and Messenger. Kustomer offerings would especially be a perfect boon for WhatsApp, which has more than 1 billion users and has expanded to business messaging services in recent months.

WhatsApp has already unveiled a business-focused app that is helping enhance business activities across apps. In India, for instance, millions of people are buying smartphones using the WhatsApp app. Conversely, Kustomer customer relation management services would go a long way in building tighter relations between customers and businesses.

Strengthening Digital Relation s

The need to better digital relationships has grown significantly in the aftermath of the pandemic. With the pandemic limiting direct interactions, most people at homes have had to buying goods and communicate with businesses virtually.

While it was highly accepted that most people would resort to buying goods online and communicating virtually with customers, COVID-19 has accelerated the same. Likewise, businesses are no longer investing in expensive storefronts and retail locations. Instead, the focus has shifted to investing in digital tools and experiences.

Regulatory Scrutiny

Kustomer acquisition comes hot on Facebook’s heels, confirming a $400 million acquisition of animate GIF maker Giphy. The acquisition should continue to arouse regulatory scrutiny on the tech giant.

While the acquisition is poised to strengthen the Facebook grip of users on its app, it comes at the worst time while also arousing lots of concerns. The tech giant has always been at crossroads with regulators over its tactics of acquiring startups that pose a significant competitive threat.

The Federal Trade Commission and dozens of states have already lodged antitrust lawsuits against the company’s practices, which they say are only geared towards curtailing competition. Immediate reports indicate that FTC and state attorneys could lodge legal actions against the social networking giant in the coming days.

Most of the cases will focus on how Facebook became the juggernaut in the social networking space. At the center of the lawsuits is the $1 billion acquisition of Instagram in 2012 and the $18 billion purchase of WhatsApp in 2014. While the two apps were not competing with Facebook initially, they have become highly popular with millions of active users