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The tech giants that made billions copying others

JP Mangalindan
Chief Tech Correspondent
Mark Zuckerberg’s Facebook has gained inspiration from other companies. Justin Sullivan/Getty Images

In Silicon Valley, companies prefer to highlight the innovation that occurs in their open offices, shared workspaces and halls, and downplay everything else. But much of today’s most popular technology is also the product of a fair amount of cribbing from the competition.

Just last week, Skype announced Highlights, the latest in a string of features rolled out over the last 8 months from services such as Facebook (FB) (and Facebook-owned companies, Instagram and WhatsApp) that closely mimic Snapchat’s popular Stories feature. Instagram, in particular, has been surprisingly upfront about its design inspiration. When Instagram launched Instagram Stories last August, for instance, Instagram CEO Kevin Systrom told TechCrunch that Snapchat deserved “all the credit.”

Some were quick to point out Facebook’s cribbing of Snapchat Stories, in part because of the remarkable rapid-fire execution earlier this year across properties including WhatsApp, Messenger and the Facebook app. But the news also raised eyebrows because it seemed like a Machiavellian scheme by Mark Zuckerberg to smite Snapchat, which reportedly spurned a $3 billion acquisition offer in 2013.  

Dig a little deeper, however, and you’ll find Silicon Valley is chock-full of similar examples from the last 20 years where companies aped other companies for ideas. As former Facebook executive Ben Ling recently tweeted, copying the competition can have huge upside potential:

Google’s Overture

Despite Google’s (GOOG, GOOGL) far-flung empire spanning different categories — smartphones, email, maps, YouTube, to name a few — the Mountain View, Calif.-based tech giant still makes the majority of its money off a cost-per-click advertising system that places ads in search engine results. But Google actually wasn’t the first company to do so.

That credit goes to Overture, which created an ads-based system that let companies bid against one another for the top listing in search engine advertising and tailor their ads to specific search queries. Advertisers only paid if users actually clicked on their ads.

In Google’s system, the placement of ads in search results is also partially determined by the popularity of those ads among users, judged by click-through rates, not just by how much advertisers are willing to pay. Overture sued Google in 2002, claiming the search giant’s system for selling ads infringed a patent granted to Overture.

Ultimately, Google settled the suit with Yahoo (YHOO), which acquired Overture in 2003, by issuing roughly $300 million in stock. (Yahoo is the parent company for Yahoo Finance.)

Facebook follows FriendFeed’s example

Former Facebook CTO Bret Taylor also co-founded and ran FriendFeed, which had a heavy influence on Facebook’s News Feed earlier on.

Facebook’s now-popular News Feed actually owes a lot to FriendFeed, a startup founded in 2007 by four ex-Google employees. Think of FriendFeed as a one-stop feed for all your social media updates, pulled in and updated on-the-fly. At the time, FriendFeed was actually more dynamic, automatically updating partly based on when users commented. (Facebook users, meanwhile, had to manually refresh their News Feeds.)

In fact, it was actually FriendFeed, and not Facebook, which came out with the “Like” button first: FriendFeed rolled out the “Like” button in 2008, with Facebook’s version arriving the next year.

No wonder Facebook acquired FriendFeed in 2009 for an estimated $50 million, and brought over CEO Bret Taylor, who served as the social network’s CTO until 2012. Although Facebook obviously popularized the News Feed-like concept — and eventually shuttered FriendFeed in 2015 — it’s clear the startup left a lasting impression.

The ride-hailing giants

Two of the most competitive companies today — Uber and Lyft — regularly release features similar to each other in a race for more passengers, like the ability for passengers to split fares or for drivers to easily rent cars. The two ride-hailing businesses pushed out their car-pooling services within 24 hours of each other in August 2014. And just year, Lyft and Uber announced the ability to schedule rides three weeks apart.

Copying doesn’t always pay off

Playing copycat in tech is easy enough, but whether companies should copy one another depends on whether doing so actually makes sense for their product. In Instagram’s case, it’s easy to argue introducing Instagram Stories was the right move, given Instagram influencers are reportedly seeing 6-10% of their followers open their Instagram Stories on a daily basis — an impressive rate.

But in other instances, copying for the sake of copying doesn’t pay off. Although Facebook has not disclosed how Facebook Stories is performing, you need only glance at the top of the Facebook mobile app on your phone to get an idea. To wit, only two or three of my 2,579 Facebook friends post Facebook Stories at any given time — anecdotal evidence reinforced by many other friends, who report similar engagement in their apps. Here, it appears Facebook users simply don’t want yet another way to create status updates inside their app.

Put simply, big tech companies? Know when to copy, and know when to leave well enough alone. 

JP Mangalindan is a senior correspondent for Yahoo Finance covering the intersection of tech and business. Follow him on Twitter or Facebook.  

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