What happened

Shares of IAC (NASDAQ:IAC) have plunged today, down by 13% as of 2:40 p.m. EDT, after Facebook (NASDAQ:FB) announced new dating features for its core social network. IAC is the parent company of Match, which has a portfolio of online dating services including Tinder and OkCupid.

So what

Facebook announced the new features at its annual developer conference F8. Facebook will add a new section to the primary Facebook app for dating and interested users will need to opt-in to access the optional service. CEO Mark Zuckerberg said that the offering was designed "with privacy and safety in mind from the beginning," noting that Facebook friends won't see your dating profile and users will only be matched with people that are not currently their Facebook friends.

Woman smilling at her smartphone with hearts coming out of it

Image source: Getty Images.

The feature will only be available to those who list their relationship status on the platform as "single," suggesting that Facebook does not want to enable extramarital relations or accommodate users that may be in open or non-monogamous relationships. CEO Mark Zuckerberg said, "This is going to be for building real, long-term relationships -- not just for hookups."

Now what

With 2.2 billion monthly active users (MAUs) at last count, Facebook's network effects dwarf all other social networking sites, including dating services. Network effects are incredibly important to all social networks, but particularly dating sites. In contrast, Match had just over 7 million subscribers at the end of 2017, a rounding error compared to the behemoth that is stepping in to challenge it. That total includes approximately 3.9 million subscribers in North America and 3.2 million subscribers internationally.

Unlike many traditional dating sites that charge subscription fees, Facebook's primary service is free and supported with ads. Some of Match's properties include free tiers, including Tinder. Match posted average revenue per user (ARPU) of $0.55 in the fourth quarter. Facebook will provide more detailed information regarding its forthcoming dating service, such as when it will be released, later this year.

Evan Niu, CFA owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.