Yahoo may be the company that has been hot on the acquisition trail lately, but Facebook has flexed its financial buying muscle with the purchase of messaging app WhatsApp for a staggering $19bn. It represents the largest purchase made by the social giant so far, surpassing the $1bn they spent on Instagram in 2012 and signifies yet another move into the mobile communications world. Not only does the move help to remove competition for Facebook, but with 450million users, WhatsApp has a massive portfolio of mobile users.
Facebook has never been afraid of acquiring technology businesses, either to get their hands on online property, to bolster their own talent pool, or to essentially put competition out of the race. Some of the biggest purchases have included the $100m Face.com, a facial recognition system, and the $1bn purchase of Instagram, the photo sharing service.
WhatsApp is one of few companies and services that are close to rivalling Facebook’s incredible growth rate. The messaging service, which offers a year’s free service before charging the equivalent of $0.99 a year, already has 450 million users and that number is growing rapidly. It is available on all mobile platforms including Android, iOS, Windows Phone, and Blackberry. Founders say that the service is currently growing at a rate of 1 million new users every day.
WhatsApp offers Facebook access to a younger demographic of user. Many Facebook users have grown up with the site, but there is evidence that the younger generation are now looking for alternative means of communication. WhatsApp is one such technology, providing convenience and affordability to its users. It also offers the social network inroads into international communities that they have yet to fully explore.
The purchase of WhatsApp by Facebook is not that surprising, although previous estimates have put the value of the app at between $2bn and $3bn, so the $19bn price tag could be considered a little inflated. It is likely to bring benefit to Facebook, however, and the app will continue to run autonomously and independently with co-founders Jan Koum and Brian Acton continuing to manage the service.