Social Media News - Facebook To Acquire WhatsApp For $19bn
Facebook invests to evolve
Social media giants Facebook have struck a deal to purchase popular messaging service WhatsApp in a deal worth $19bn (£11.4bn). In Facebook’s ever increasing monopoly, this is their biggest acquisition to date.WhatsApp currently has over 450 million users across the globe, and is reportedly growing by one million per day. The messaging service is an alternative way to send messages across the Internet without incurring standard SMS text messaging fees. They make money by charging $1 per year, but also offer a free version of their app.
The two firms came to an agreement that $4bn will be paid straight away to WhatsApp, with another $12bn being given in Facebook shares. There is an additional $3bn stock that will be paid to WhatsApp’s founders and employees at a later date. WhatsApp currently has around 50 employees.
Mark Zuckerburg stated that the prospect of a deal only
started surfacing 11 days ago, and although he acknowledged that WhatsApp is on
target to secure a billion users, he still has no plans to add advertising on
the interface, as he believes this is not the most effective way to make money
out of the service.
Despite Facebook’s ownership of the company, WhatsApp co-founder Jan Koum stated that he plans to operate the firm “independently and autonomously”, whilst also indicating that he will also become a member of Facebook’s board of directors.
In an official statement Mr Koum said “we’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.” Mr Koum’s jubilance was not surprising, considering he and his comrades are now Silicon Valley’s newest billionaires.
Despite Facebook’s ownership of the company, WhatsApp co-founder Jan Koum stated that he plans to operate the firm “independently and autonomously”, whilst also indicating that he will also become a member of Facebook’s board of directors.
In an official statement Mr Koum said “we’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.” Mr Koum’s jubilance was not surprising, considering he and his comrades are now Silicon Valley’s newest billionaires.
Of course many people will query such a massive sum of money
for an app, but WhatsApp could launch Facebook onto a whole new level of
popularity due to its younger user base and soaring popularity overseas. Cathy Boyle who is a senior analyst at
research firm eMarketer emphasised this point as the buying attraction for
Zuckerburg by saying “WhatsApp actually has a greater penetration in a lot of
international markets than Facebook.”
This investment could also indicate that Facebook is
prepared to tap into the telecommunications industry with WhatsApp potentially
siphoning the profits that the telecom companies would make out of SMS text
messaging.
This purchase by Zuckerburg and his army of visionaries spells a familiar trend in the business world. Analogies will be made to retail trade where massive companies such as Wallmart monopolise the streets. This can be said for the social networking world now as big guns are emerging when small independent apps are generating success off the back of miniscule projects. For the founders of these smaller apps, it is a tremendous achievement to earn such applause and off the back of this approval from a firm like Facebook, they also earn a monstrous amount of money. Some though will feel as if the personality is stripped from independent apps if a main player gets their hands on the product, but for now this purchase is another indication that the social media sphere is gaining in size and influence day by day.
Mark Zuckerburg has without doubt taken a massive risk in laying $19bn on the table for WhatsApp, but it may be a risk that catapults Facebook into a new realm of popularity. Previous to this their biggest acquisition was Instagram in a deal worth $1bn, although they reportedly tried to acquire Snapchat for $3bn. It is clear to see from these bold moves by Facebook that they are trying to drive ahead in the cut-throat competitive world of social media.
This purchase by Zuckerburg and his army of visionaries spells a familiar trend in the business world. Analogies will be made to retail trade where massive companies such as Wallmart monopolise the streets. This can be said for the social networking world now as big guns are emerging when small independent apps are generating success off the back of miniscule projects. For the founders of these smaller apps, it is a tremendous achievement to earn such applause and off the back of this approval from a firm like Facebook, they also earn a monstrous amount of money. Some though will feel as if the personality is stripped from independent apps if a main player gets their hands on the product, but for now this purchase is another indication that the social media sphere is gaining in size and influence day by day.
Mark Zuckerburg has without doubt taken a massive risk in laying $19bn on the table for WhatsApp, but it may be a risk that catapults Facebook into a new realm of popularity. Previous to this their biggest acquisition was Instagram in a deal worth $1bn, although they reportedly tried to acquire Snapchat for $3bn. It is clear to see from these bold moves by Facebook that they are trying to drive ahead in the cut-throat competitive world of social media.
Alex is an English Literature and Sociology undergraduate whose love for written word has led him to write about some obscure topics in his time. Currently a content writer at Social Media Frontiers, be sure to follow him @AlexSatSMF.
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Social Media News - Facebook To Acquire WhatsApp For $19bn
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Thursday, February 20, 2014
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Thursday, February 20, 2014
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