Facebook acquiring WhatsApp: If you can’t beat them, buy them out

Thursday, 20 February 2014 - 12:20pm IST Updated: Thursday, 20 February 2014 - 12:03pm IST | Agency: dna Web Team

Social media giant Facebook has just monopolised the messaging market with its whopping $19 billion cash and stock buyout of mobile messaging company WhatsApp. The deal, which is the largest acquisition by the Mark Zuckerberg-led firm, is even bigger than what Facebook offered Snapchat. But that is understandable given that WhatsApp is arguably the biggest messaging company out there, and an obvious rival to Facebook in that capacity.

WhatsApp has gradually been gaining enormous traction as a social media presence, taking away some of the attention from Facebook and other social media companies. Facebook, which has openly stated that they are a mobile company, have apps like Facebook Messenger and Instagram which are direct competitors of WhatsApp.

In early January 2014, Facebook reported that it had approximately 945 million monthly mobile users. However, these users use the app primarily to check their timelines and message each other. WhatsApp has released statements claiming over 450 million monthly active users, who use different features of the app, like chat, setting statuses, sending group messages, broadcast messages (a form of mass texting), sending photos and videos, and sharing voice notes.

In addition to this, WhatsApp has several attractive features that add to its mass appeal. There are no ads, it is a free texting app, it’s faster and more interactive than plain texting, and the user interface is fast and fluid. The app is most appealing to the younger generation, who prefer rapid fire text messaging but also want an interactive touch to it – in essence, that’s exactly what WhatsApp provides.

WhatsApp has done what Facebook has been trying to do for years: integrate itself with the international market, most of which is not American. WhatsApp’s easy to use features and simple user interface make it a favourite for those in countries other than the United States. In a short time and with very little marketing, WhatsApp has become a noticeable threat to the social media giant, and so it is very understandable that Facebook would pay this much to stretch its virtual presence. 

Nowadays, there are other messaging apps like WeChat, Viber and SnapChat and of course Facebook Messenger, but none have reached the level of popularity that Whasapp enjoys, at least when it comes to a messaging app. Facebook is definitely one of the most popular mobile apps, and now with its acquisition of WhatsApp, it is most likely going to dominate the text messaging sector as well.

It has been a trend lately within the tech world for the big players to change their interface and features to adapt to the new wave of social media, which is primarily led by WhatsApp. Twitter changed its user interface, Google integrated all its chat products under the “Hangouts” moniker and Facebook seemed to be taking cues from WeChat, Line and Instagram (another Facebook property) added the Direct Messages.

For a small time company like WhatsApp, which began in 2009, to terrify a giant of industry like Facebook, goes to show how popular the free texting app has become. Reports mention that WhatsApp was much more popular than Facebook in several large developing markets, as per a survey conducted by Jana Mobile. In India, Brazil, and Mexico, respondents were 12 to 64 times more likely to say WhatsApp was their most used messaging app, as compared to Facebook.

It is not surprising that Facebook made an offer to a company that was rivalling their smart phone presence. “Facebook works harder than any other social site to keep people coming back,” said Forrester analyst Nate Elliott. “In the past year, they’ve focused much of that effort on mobile – introducing Home and Paper, and upgrading both their Facebook and Messenger apps – and this is another step towards keeping people engaged no matter where they are.”

Facebook promised that WhatsApp would remain independent, and said it served a real-time communication need, while Messenger was used more in the style of email between members of the social network. 

Zuckerberg said WhatsApp – a cross-platform mobile app that allows users to exchange messages without having to pay telecom charges – was worth the steep price because its blistering growth around the globe has it on a clear path to hit a billion users and beyond.

“Services with a billion people using them are all incredibly valuable,” Zuckerberg said while discussing the purchase price during a conference call with analysts.

The deal came from a chat Zuckerberg had with WhatsApp co-founder Jan Koum, whom he described as a “valuable thought partner” and friend of many years.

Under the agreement, WhatsApp co-founder and CEO Jan Koum will join Facebook’s Board of Directors. Facebook said the acquisition will not impact WhatsApp’s brand, which will be maintained and the company’s headquarters will remain in California’s Mountain View.

(With Agency Inputs)

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