On Thursday, Facebook (NASDAQ:FB) announced the acquisition of PrivateCore, an internet security firm. Although the terms of the deal were not disclosed, PrivateCore originally raised $2.3 million in funding in 2011. This news comes on the heels of Google's announcement that it will be altering its search algorithm to give preference to websites with better encryption.
The implications of this deal goes deeper than Facebook just beefing up its security. Facebook is ramping up its E-Commerce integration and would like to take every measure to ensure the safety of this new, sensitive data it will be storing. PrivateCore's vCage technology protects servers from persistent malware, unauthorized physical access, and malicious hardware devices, making it safer to run any application in outsourced or hosted cloud environments.
In my previous article, "Facebook Is Getting Closer To E-Commerce," I discussed how Facebook was on the precipice of integrating E-Commerce into its platform. One of the first ways that they will accomplish this will be to integrate a "buy button" which will allow users to make purchases through advertisements or other posts directly from their news feeds. Facebook will make buying off the site much more fluid by storing user's credit card information, so the entire purchase flow will stay within the site. The ROI for advertising on Facebook, and thus ad prices, should increase dramatically once this product is launched. With this announcement, I predict that Facebook will roll out the "buy button" sometime this quarter, as they integrate PrivateCore's security software.
Disclosure: The author is long FB. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I also own FB LEAP call options