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Facebook’s Onavo Gives Social-Media Firm Inside Peek at Rivals’ Users

The Facebook application icon on a phone screen, August 3, 2017.

Months before social-media company Snap Inc. publicly disclosed slowing user growth, rival Facebook Inc. FB 0.41% already knew.

Late last year, Facebook employees used an internal database of a sampling of mobile users’ activity to observe that usage of Snap’s flagship app, Snapchat, wasn’t growing as quickly as before, people familiar with the matter said. They saw that the shift occurred after Facebook’s Instagram app launched Stories, a near-replica of a Snapchat feature of the same name.

In February, just before going public, Snap confirmed that its user base grew more slowly in the last three months of 2016 than the prior year. Snap’s latest financial figures Thursday showed that its growth challenges persist.

Facebook’s early insight came thanks to its 2013 acquisition of Israeli mobile-analytics company Onavo, which distributes a data-security app that has been downloaded by millions of users. Data from Onavo’s app has been crucial to helping Facebook track rivals and scope out new product categories, The Wall Street Journal reported earlier this week.

Interviews with more than a dozen people familiar with Facebook’s use of Onavo data show in detail how the social-media giant employs it to measure what people do on their phones beyond Facebook’s own suite of apps. That information shapes Facebook’s product and acquisition strategy—furthering its already formidable competitive edge, the people said.

A Facebook spokesman said it is clear when people download Onavo what information it collects and how it is used. “Websites and apps have used market-research services for years,” the spokesman said, noting that the company also uses outside services to help it understand the market and improve services.

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