Following a lengthy and costly fight with regulators last year, messaging app Kik Messenger was forced into a corner and had nearly shut down. Fortunately, US holding company MediaLab has now decided to step in to save the company by outright buying the embattled tech firm, while also pledging to further invest in its future operations.
Kik Messenger, developed by Canadian tech firm Kik Interactive, was at one point one of the biggest messaging apps on the market. At its peak, the app had hundreds of millions of active users, sending its developer's private market valuation well past $1 billion.
Due to its popularity and rapid growth, Kik was considered to be one of the rare tech unicorns with massive potential to become a global social media powerhouse.
The app was officially launched in 2010 and quickly became popular due to its feature of allowing users to chat anonymously.
The app was marketed as a freeware messaging platform that did not require any type of registration or its user's personal details. Kik received major funding from global investors, most notably a $50 million investment from Chinese tech giant Tencent in 2015.
Things quickly went downhill last year, when regulators began running an investigation into the company's cryptocurrency project. After the investigation, the Securities and Exchange Commission (SEC) filed a lawsuit against the company in September last year for its failure to properly register its initial coin offering (ICO) for its Kin cryptocurrency.
Kik had heavily invested in the growth of its Kin cryptocurrency, apparently pouring millions of dollars into its development and marketing. The company's digital currency project was met with much enthusiasm from investors and the company had managed to raise around $100 million in its first ICO.
Late last year, Kik CEO and founder Ted Livingston mentioned in a blog post that the company was on the brink of bankruptcy due to its long and expensive battle with regulators. The dispute apparently drained all of the company's resources, which had resulted in its decision to shut down its messaging app.
MediaLab announced on Friday that it had acquired Kik for an undisclosed amount. The holding firm stated that it plans to halt the shutdown of the app and to further make investments in its development. The company mentioned that it still believed in Kik's potential and that its best days are still ahead of it.
As part of the acquisition deal, MediaLab will be shouldering the app's expenses moving forward. MediaLab also plans to introduce new features to the app, including placing advertisements for monetization purposes. MediaLab revealed that it will be enhancing the app by making it much faster and more reliable by tweaking its code and removing bugs.
