The Deal
Snap acquired AI Factory (a Ukrainian AI development team) for approximately $166M and Ariel AI (London-based 3D body tracking startup) in early 2020. AI Factory had been building AI-powered video features for Snapchat as a contractor for years before being acquired outright. Ariel AI brought real-time 3D body modeling capabilities.
Strategic Rationale
Snapchat differentiation depends on AI-powered AR lenses, filters, and camera effects. AI Factory team had already proven their capabilities by building Cameo (AI face-swap video) as contractors. Ariel AI 3D body tracking enabled full-body AR experiences that would keep Snapchat ahead of Instagram and TikTok.
Impact
The acquisitions strengthened Snapchat core AR platform, enabling more sophisticated lenses that could track bodies, generate 3D environments, and create AI-powered video effects. These capabilities kept Snapchat competitive in the creator economy against well-funded competitors.
What Happened After
The acquired teams contributed to Snapchat My AI chatbot, AR lenses with body tracking, and AI-powered content creation tools. Snap continued acquiring AI companies (including WaveOptics for AR glasses) as part of a broader strategy to become an AI-powered camera and communication platform.