Asia-Pacific News

Facebook taps India start-up scene with acquisition of Little Eye

James Crabtree and Hannah Kuchler

Facebook has bought Bangalore-based mobile technology company Little Eye Labs – the US company's first acquisition in India – in a deal that highlights the growing interest among global technology groups in the country's start-up scene.

Little Eye develops software used to improve the performance of applications running on Google's Android mobile phone operating system, which is an ever-growing priority for Facebook's business.

(Read more: India's hottest start-up stuns nation)

Diptendu Dutta | AFP/Getty Images

Facebook did not disclose the size of the deal with Little Eye, which has fewer than 10 employees, although industry estimates suggested the price was no more than $15m.

The acquisition comes as Facebook users increasingly access the US social media site from a mobile application, rather than a website visited from computer desktops.

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In the past quarter, mobile advertisements contributed about half of the group's total advertising revenue for the first time.

Jayant Sinha, a Mumbai-based venture capitalist who sits on the boards of several technology companies, said the deal was likely to be the first in a number of comparable acquisitions, as companies such as Facebook, Twitter andGoogle sought further to develop their mobile presence.

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Subbu Subramanian, a Facebook engineering manager based in California, praised Little Eye's "world-class technology" and called the acquisition an important development in the company's attempts to improve its user experience on Android devices.

"At Facebook, we remain focused on producing useful and engaging mobile apps. The Little Eye Labs technology will help us to continue improving our Android code base to make more efficient, higher-performing apps," he said.

(Read more: American-style start-ups take root in India)

Many US-based technology companies, including Google and Microsoft, maintain substantial back-office and development capabilities in India, although Facebook performs almost no software engineering in Asia's third-largest economy.

The Facebook deal marks one of the first occasions in which a top-tier US technology group has acquired an Indian start-up to help with high-end mobile technology.

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The acquisition is also indicative of the attention that India, a country where internet users overwhelmingly go online on their phones, is attracting as a source of talent for the development of mobile applications.

"India's relationship with Silicon Valley is entering a new phase and moving beyond being a simple outsourcing hub for basic tech functions, as it has been for the past decade," Mr Sinha said.

"Instead, India is now becoming a major source of innovation and talent, as companies such as Facebook try to tap the next billion people who are going to come online, who will do soon the mobile internet, and almost all of whom will be located in the developing world."

(Read more: Crowdfunding 2.0: A new era for start-up finance)

Little Eye Labs, which was founded in India's technology capital of Bangalore only a year ago, said the sale would help the company's products "make an impact" on Facebook's more than 1bn users.

"The entire Little Eye Labs team will move to Facebook's headquarters in Menlo Park, California. From there, we'll be able to leverage Facebook's world-class infrastructure and help improve performance of their already awesome apps," Little Eye said.