The tech world was taken by surprise on February 19 when the news that broke that Facebook had acquired WhatsApp, the popular messaging app for $19 billion. This acquisition is the largest ever made by the social media giant and worth more than those made by Google, Microsoft or Apple. In its press release, Facebook said it will pay $4 billion in cash for WhatsApp and $12 billion in stock, the other $3 billion in stock grants to be paid out for WhatsApp’s founders and staff if they remain employed by Facebook for another four years. Like Instagram, WhatsApp will also function as an independent unit within Facebook.
This acquisition is expected to achieve the shared mission of Facebook and WhatsApp to bring more connectivity and utility to the world by rendering more efficient and affordable core Internet services. It is expected this will increase the user engagement across both companies and help them to accelerate their growth. We can read these intentions from the comments from their founders. Mark Zuckerberg, Facebook founder and CEO said, “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable” while Jan Koum, WhatsApp co-founder and CEO, said, “We’re excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world”.
WhatsApp is a rapidly growing real-time mobile messaging service with more than 450 million people using the service in a month (70% of them are active on a given day). The messaging app is currently adding over 1 million new registered users per day. Total messaging volume within the app is near to the global telecom SMS volume. As with traditional text messaging, WhatsApp provides connectivity via cellphone numbers and as WhatsApp sends that actual messages over mobile broadband, it is especially cost-effective for communicating with people abroad.
In a 2013 survey conducted by On Device Research on the popularity of social messaging apps across five smartphone markets including US, Brazil, South Africa, Indonesia and China, WhatsApp finished at the topmost position with Facebook Messenger at the second position.
Much of WhatsApp 450 million users are youngsters. In 2013, the Guardian reported on the mass exodus of teens from Facebook to WhatsApp (mainly social messaging apps). In 2012, there were reports of the younger generation gravitating towards photo-sharing site Instagram. It seems that by acquiring Instagram and WhatsApp, Facebook has dealt with competition quite effectively.