Facebook Paid $19 Billion For WhatsApp

Honestly, my first reaction when I read the news is ‘What the heck are they paying for?’ $19 Billion (MYR 62,595,500,000.00) is a colossal amount of money, even for a popular mobile messaging service like WhatsApp. It is the biggest acquisition made by a tech-industry company, bigger than any that Google, Microsoft or Apple has ever done. Still, the deal translates to roughly only 9 percent of Facebook’s market value. Yup, they are very rich indeed and rich people like to become even richer each day.

The deal really shocked many people and not just me. It is not the acquisition that surprised us but the amount invested by Facebook. Gartner analyst, Brian Blau said “I am not surprised they went after WhatsApp, but the amount is staggering.” For the record, Google’s biggest deal, Motorola Mobility, stood at $12.5 billion, while Microsoft’s largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion. So, what does Mark Zuckerberg and Facebook see in Whatsapp?

“This is a bet on the future for Facebook,” Blau said. “They know they have to expand their business lines. WhatsApp is in the business of collecting people’s conversations, so Facebook is going to get some great data.” In that sense, the acquisition makes sense for 10-year-old Facebook as it looks to attract its next billion users while keeping its existing 1.23 billion members, including teenagers interested. The company has said it will develop a “multi-app” strategy, creating its own applications that exist outside of Facebook and acquiring others.

Well, perhaps statistics and the news below has made Mark Zuckerberg and Facebook worried and have to plan for the future:

Facebook ‘dead and buried’ as teens switch to Snapchat and Whatsapp

Teenagers are turning their back on Facebook ‘in their droves’ and switching to simpler social networks and messaging apps, new research has found. Not only are 16-18 year olds moving on to rivals such as Snapchat, Whatsapp and even Twitter, teens are embarrassed to be so much as associated with Facebook, as their parents adopt the network, researchers said. – The Independent UK

Facebook likely prizes WhatsApp for its audience of teenagers and young adults who are increasingly using the service to engage in online conversations outside of Facebook, which has evolved into a more mainstream hangout inhabited by their parents, grandparents and even their bosses at work. WhatsApp has more than 450 million monthly active users. In comparison, Twitter has 241 million users as at the end of 2013.

Facebook said it is keeping WhatsApp as a separate service, just as it did with Instagram, which it bought for about $715.3 million two years ago. The deal is expected to close later this year. Shares of Menlo Park, Calif.-based Facebook slid $1.12 to $66.94 in extended trading after the deal was announced.

Source: AFP

Updated (21/02/2014):

Facebook coughs $19bn for WhatsApp: Why did it pay $45 for your phone book? And they’re not the biggest mugs. We are

+Analysis Putting a man on the Moon cost less than what Facebook paid for WhatsApp, a generic chat app. So why is Facebook paying $45 per user to gain functionality it already has? The silly numbers look even sillier when you consider Facebook’s own Messenger only lags narrowly behind WhatsApp in terms of usage. Facebook Messenger maintains a lead in the USA, despite WhatsApp’s growth. The most likely explanation is that it’s actually paying $42 for your phone book.

WhatsApp notoriously rifles through your address book, scoops up your phone numbers, and uploads them to its servers. This is something Facebook has wanted for some time since its own phone records are incomplete.Although half of its daily users are mobile, many don’t share their full contact network with Facebook, and of the desktop-only Facebook users, many don’t share their telephone numbers.

Read more at: The Register

– Facebook Paid $19 Billion For WhatsApp