Whilst $19 billion (around £11.4 billion) might seem like an excessive price to pay for what is essentially a no-frills messaging app, WhatsApp has had a monumentally successful 12 months, completely eclipsing traditional SMS text messaging in many areas. Facebook has recently bought the app in approximately $4 billion in cash and $12 billion in Facebook stock, as well as an additional $3 billion in stock for the founders of WhatsApp and their employees at a later, as yet unspecified date. Shares in Facebook dropped a reported 5% in after hours trading following news of the buy-out, but they have recovered slightly since.
The buy-out marks the largest acquisition Facebook has ever made, with the honour previously belonging to photographic social media platform Instagram, which they bought for a (comparatively) measly $1 billion back in 2012. Facebook founder Mark Zuckerberg announced the acquisition in a statement in which he describes the services WhatsApp offer as “incredibly valuable”, as the app is “On a path to connect 1 billion people”. Zuckerberg (who first floated the prospect of the deal just 11 days ago) also said that he has known WhatsApp co-founder and CEO Jan Koum for a long time and was “Excited to partner with him and his team to make the world more open and connected”.
WhatsApp has had an astonishing year, with its real-time mobile messaging service now being used by over 450 million people every month, 70% of whom use the app on a daily basis. It's also been reported that the app is experiencing an influx of more than 1 million users daily, and that the volume of messages is actually competing with the entire global volume of SMS messages! The app is a simple, but effective messaging service, which circumvents the networks and their subsequent fees, allowing users to send messages over the internet either under a free or subscription model. Whilst WhatsApp offers a similar service to Facebook's existing 'Messenger' app, it's been stated that 'Messenger' will continue to operate as a standalone app.
Koum has said that he will not only become a member of Facebook's board of directors, but will continue to operate his firm independently of its new owners, retaining the brand. There will also be no advertising placed on the app, as both he and Zuckerberg feel that ads are not the best way to make money from messaging systems. “WhatsApp's high user engagement and growth are driven by the simple, powerful and instantaneous messaging capabilities we provide” he says, underlining his excitement at partnering with Zuckerberg and that he believes the partnership will help them to bring WhatsApp to “More people around the world”.
WhatsApp co-founder and CEO Jan Koum
As well as the recent WhatsApp acquisition, it's been reported that Facebook offered $3 billion to acquire Snapchat, the picture messaging service that has taken the smartphone and tablet world by storm in recent months. Google made a similar offer, but both were reportedly rejected.
With all of the recent acquisitions under their belt, and many more undoubtedly in the pipeline, Facebook seems set to contest Google's crown as the 'king of the internet' in 2014.
Benjamin Hiorns is a copywriter from the UK who has only recently jumped on the WhatsApp bandwagon. Facebook ranks as his achilles heel when it comes to procrastination.
