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Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Facebook did buy Karma—but Karma was the name of a mobile social-gifting startup, not good fortune. Facebook announced the acquisition on May 18, 2012, shortly after its IPO. The price was not disclosed. The plan was to turn birthdays and other social occasions into a way to buy and send real gifts through Facebook. Its successor, Facebook Gifts, closed on August 12, 2014.
What Facebook bought
Karma was an app for sending gifts to people you knew through Facebook. Facebook announced the acquisition on May 18, 2012. Contemporary reporting said Karma’s 16-person team joined Facebook and described the deal as a product acquisition, not just a hire of the founders. The purchase price was not disclosed. TechCrunch’s acquisition report covered the team and transaction.
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Meta eGift Card - $50 - Standard | $50.00 | Buy on Amazon |
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Visa Physical Gift Card $200 (plus $6.95 Purchase Fee) | $206.95 | Buy on Amazon |
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Visa Virtual eGift Card | $206.95 | Buy on Amazon |
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$15 Apple Gift Card—Email Delivery | $15.00 | Buy on Amazon |
The company had raised about $4.5 million before the acquisition, according to its financing disclosures as reported by TechCrunch. That funding figure is not the acquisition price.
How Karma worked
The app’s central idea was simple: send a physical gift without first asking the recipient for a mailing address. A sender chose a gift and recipient, then sent a notification through Facebook, text, or email. The recipient could provide a shipping address, choose a variation such as color or size, exchange the gift, or, in some cases, direct its value to charity. TechCrunch’s description of Karma and the Los Angeles Times account describe those mechanics.
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- Choose an amount you’d like to send—the prepaid balance is instantly ready to use and never expires.
- Can be redeemed on over 500 apps, games and experiences in the Meta Quest store.
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- Meta Quest is for ages 13+. Valid only for transactions from the Meta Quest Store. Cards do not expire and carry no service or dormancy fees. Not redeemable for cash, and cannot be transferred, resold, returned, refunded, or exchanged, except as required by law. Void where prohibited. Terms and conditions apply.
Karma also used social occasions—birthdays, engagements, weddings, new jobs, births, and condolences—as prompts. That made the product more than a digital storefront: it tried to connect a purchase to a moment in a relationship, while letting the recipient handle the practical details privately.
Why Facebook wanted a gifting app
A mobile commerce experiment
In 2012, Facebook needed to show that its large audience could support revenue on mobile, not only through advertising. Karma offered an existing mobile shopping experience and a team with experience designing transactions. Facebook could test whether users would buy something from inside a social product rather than follow an ad to another retailer.
Social context as product discovery
Facebook’s potential advantage was context: birthdays and life events, friend connections, and signals such as interests could help surface a timely gift. A reminder that someone has a birthday, however, is not proof that a user wants to shop, or that Facebook knows what would make a good gift. The strategy depended on translating social relevance into purchase intent.
A purchase instead of a birthday post
Facebook Gifts aimed to offer a more tangible response than a birthday message on someone’s Timeline. The commercial logic was attractive to both sides: merchants could gain exposure to potential customers, and Facebook could participate in sales. Launch coverage reported that Facebook expected a share of transactions, but did not disclose the rate. TechCrunch’s launch report covered the business model and partners.
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- Gift Cards are shipped active and ready for use.
- This card is non-reloadable. No cash or ATM access. Funds do not expire. If available funds remain on your card after the valid thru date has passed, please call customer service for a replacement card. A one-time purchase fee applies at the time of checkout. No fees after purchase.
- To access your card information safely, type the complete website address shown on your Gift Card (MyGift.GiftCardMall.com) directly into your browser's address bar. Don't use search engines or shortened versions of the website address, as these may lead you to fake or fraudulent sites. Do not provide any Gift Card details (example: Card Number) to someone you do not know or trust. If you believe you've reached an illegitimate website, contact cardholder service at 1-888-524-1283. Be cautious of phishing sites, there are a variety of scams in which fraudsters try to trick others into paying with gift cards.
- To report your Lost or Stolen Physical Visa Card, call Customer Service 24/7 at 1 (888) 524-1283 to cancel your Gift Card as soon as you can. You will be asked to provide the Gift Card number and other identifying information.
- Use your Visa Gift Card in the U.S. everywhere Visa debit cards are accepted, including online.
From Karma to Facebook Gifts
Facebook adapted Karma into Facebook Gifts. The service launched to a subset of U.S. users on September 27, 2012, then became available to all U.S. users on December 11, 2012. The sequence matters: the acquisition was announced in May; the Facebook-branded product arrived months later.
At launch, Gifts included physical products and digital gift cards. TechCrunch reported more than 100 brand partners, including Starbucks, Uber, Warby Parker, and 1-800-Flowers. Facebook’s December announcement listed categories such as food and drink, home and kitchen, baby and kids, wine, and charitable contributions.
- Facebook surfaced a birthday or another gifting occasion.
- The sender selected a product or gift card.
- The recipient received a notification.
- For a physical item, the recipient supplied a shipping address and could customize or exchange the gift.
- The merchant fulfilled the order, while Facebook provided the discovery and transaction experience.
The U.S. rollout was gradual, not a global launch. At launch, desktop and Android users could buy and receive gifts; iOS users could receive them, while purchasing was expected in a later update. International expansion was under consideration, but contemporary reporting did not give a firm date.
Why the model was harder than the pitch
Recommendations could not manufacture intent
A social graph can reveal an occasion without revealing how close two people feel, what the recipient likes, whether a gift is welcome, or whether the sender intends to spend money. Mistimed or generic recommendations risked making a personal gesture feel automated.
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- Visa Virtual eGift Cards are designed for online use only. Gift Cards are subject to Terms and Conditions: a.co/5bw3qXJ
- When you access your Visa Virtual eGift Card for the first time, you’ll need to register your name, address, phone number, and email address via activationspot.com. These details should also be used as your billing address for online purchases, as many merchants require address verification for purchase authorization.
- This Visa Virtual eGift Card is non-reloadable. No cash or ATM access. Visa Virtual eGift Cards are emailed active.
- Funds do not expire but your Visa Virtual eGift Card has a ‘valid thru’ date (9 years from date of purchase). If funds remain after this date has passed, please call the Toll Free number found on your Visa Virtual eGift Card for a replacement card. A one-time purchase fee applies at the time of checkout.
- This item is not eligible for refund, resale, or return. Available for sale within the United States only. Not available to residents of Puerto Rico, Hawaii, New Mexico, South Dakota, West Virginia and the US Virgin Islands.
Physical gifts brought retail work
Shipping, stock, product quality, regional availability, returns, exchanges, and customer support are operational problems, not just interface problems. Alcohol also brings restrictions that vary by location. Facebook had to coordinate with merchants and fulfill a promise to recipients without having the same direct control over products and delivery as a retailer.
Social visibility can change the meaning of a gift
A gift connected to a social network can feel generous, but visibility to others can also create pressure to give or make a gesture feel performative. Academic work on social visibility and digital gifting later discussed Facebook Gifts as a discontinued example. The product’s recipient-controlled address and exchange features reduced some awkwardness, but did not remove the social dynamics.
The catalog had to justify the promise of personalization
Contemporary launch coverage described familiar items such as chocolates, teddy bears, wine, and gift cards. A birthday prompt could make shopping timely, but a narrow or generic selection made it harder to deliver the feeling of a gift chosen specifically for one person.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Facebook retreated from physical gifts, then closed Gifts
In August 2013, Facebook shifted away from selling physical gifts and put more emphasis on digital gift codes and Facebook gift-card credit. TechCrunch reported that these digital options represented 80% of sales at the time of the redesign; that was contemporary trade reporting about the product’s sales mix, not a comprehensive financial disclosure from Facebook. See the 2013 report.
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Digital gifts avoided shipping and much of the complexity of handling physical products. They were easier to deliver, but a gift-card-focused service also had less room to distinguish itself from other ways of buying and sending gift cards.
Facebook Gifts shut down on August 12, 2014, less than two years after the service’s broad U.S. availability. TechCrunch’s shutdown report described Facebook’s move toward tools that helped businesses and developers drive sales on the web, mobile, and Facebook. Reuters also reported the closure. The evidence supports a failed Gifts experiment, not a conclusion that Facebook abandoned commerce altogether.
What the acquisition says about social commerce
- Discovery is not conversion. A birthday notification can identify an occasion, but does not guarantee the user wants to buy or that the recommendation fits.
- Retail operations are different from advertising. Selling physical goods brings fulfillment and service obligations that a platform sending customers to merchants can avoid.
- Social data has limits. Knowing that people are connected—and when an occasion occurs—does not reveal the private meaning of a relationship.
- Facebook changed its role. Gifts put the company in the middle of a branded gift-buying experience; the later direction emphasized enabling businesses to sell rather than operating that gift shop itself.
Facebook bought a product and a team with a plausible way to turn social moments into transactions. The experiment ended quickly, but its closure does not show that social platforms cannot influence commerce. It shows the gap between spotting a reason to shop and making a personal purchase experience work.
Quick Recap
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