The Italian mobile application developer Bending Spoons S.p.A. today announced its intent to acquire the YouTube rival Vimeo.com Inc. in an all-cash deal worth around $1.38 billion.

Bending Spoons said it expects the transaction to close by the fourth quarter of this year, subject to it receiving regulatory approvals. At that time, the publicly traded Vimeo will be delisted from the stock market.

Founded in 2004, Vimeo is a U.S. video hosting and sharing platform that’s somewhat similar to YouTube, but stands out for its creator focus. Content creators can use various tools, including some artificial intelligence features, to produce and share slick videos. It has become popular for its high-definition playback options and its lack of ads at a time when YouTube has more than ever.

The company span off from InterActive Corp. in 2021 to become an independent and publicly-traded entity, but it has struggled to grow since then, and has lost almost 90% of its market value. As a result, Vimeo’s executive leadership last year said it’s considering strategic options for the company.

Bending Spoons, which owns popular applications including Evernote Corp., MeetUp Inc. and WeTransfer B.V., was first mentioned as a possible acquirer of Vimeo in 2024, in the wake of that announcement.

Bending Spoons co-founder and Chief Executive Luca Ferrari said he’s planning to make “ambitious investments” in the U.S. and other priority markets for Vimeo once the acquisition closes. He said these investments will span all key areas of its business, including its creator-focused and enterprise offerings as well as “responsible” AI-enabled features.

However, the future may not be so bright for some of Vimeo’s employees. The Italian company has established a pattern of acquiring smaller, struggling firms and then embarking on cost-cutting drives, laying off staff and scaling back on what it deems to be unnecessary features and services.

For instance, when it acquired the note-taking application Evernote in 2022, it shortly afterwards took the decision to lay off most of its U.S. and Chile-based employees and move its operations to Milan. It followed that by closing down the Linux-based versions of Evernote, and restricting the features available to free users. Similarly, when Bending Spoons bought WeTransfer last year, it promptly laid off 75% of that company’s workforce, before limiting free users to just 10 file transfers per month.

Vimeo currently makes money through a subscription-based model, where content creators and businesses can pay to access premium video creation tools, including its more sophisticated AI offerings. It also provides monetization options for content creators, who can create their own subscriptions for exclusive videos.

Bending Spoons hasn’t yet mentioned any concrete plans, but given its previous history, it could well put more of its video creation tools behind a paywall, and layoffs wouldn’t be a surprise either, said Constellation Research Inc. analyst Holger Mueller.

“It’s the beginning of a new chapter in Vimeo’s story, but don’t expect a happy ending,” the analyst said. “Bending Spoon’s practice of cutting costs at all cost will almost certainly be applied here, as the company has struggled going it alone. Given its Italian roots, Bending Spoon may try to position Vimeo as a video platform aimed more at Europeans, rather than trying to compete with YouTube.”

Vimeo CEO Philip Moyer said in a statement that Bending Spoons aims to expand the company’s product offerings across all major segments, including its self-serve business, Vimeo Streaming and Vimeo Enterprise.

Image: Vimeo