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Business News Digital
Facebook buys WhatsApp in mega-bucks deal
By Chris Cooke | Published on Thursday 20 February 2014
So Facebook yesterday – somewhat out of the blue – announced it had gone and bought popular messaging app WhatsApp, sort of the Skype of text messaging if you’re not one of the 450 million+ people using the service. And here’s the fun bit: it’s paying $19 billion for it. Why? Well, because, as you all know, tech companies these days are valued by a goat in Milwaukee called Terrance. And he’s an idiot.
It should be noted most of the $19 billion will be paid with Facebook stock (WhatsApp’s founders and investors will have to make do with just $4 billion in cash), and there is some logic to the acquisition. When it emerged that photo-sharing was becoming ever more important in social networking, Facebook bought Instagram. More recently an increasing amount of online chatter has shifted off the social networks onto messaging services, so Facebook buys the biggest of them too.
WhatsApp is also particularly popular in some emerging markets where Facebook wants to further build is reach, and – perhaps most interestingly – the messaging service is subscription-based rather than ad-funded. It’s a nominal subscription fee – and capitalises on the fact people are used to paying for SMS messaging, and by comparison WhatsApp is really cheap – but crucially it brings an alternative business model to the Facebook group, which promises it will leave the WhatsApp team to their own devices despite the takeover.
