As in really, really big. As in $19 billion big. As in the second-biggest tech acquisition since…ever.
As you’ve no doubt read by now, the world’s largest social media network purchased Mountain View, California-based chat and mobile messaging service WhatsApp in late February, reportedly paying a mind-numbing $19 billion for the acquisition of a 5-year-old company with just 55 employees and $20 million in revenues in 2013.
In a lengthy, detailed post on Facebook – naturally – Facebook founder and CEO Mark Zuckerberg made the purchase sound like a truly classic merger. Zuckerberg stated that “the entire team” at WhatsApp will be incorporated into Facebook’s existing and ever-expanding infrastructure, yet “continue to operate independently within Facebook” from their existing location in Mountain View. Zuckberberg also said the WhatsApp “product roadmap will remain unchanged,” and the two companies will work closely together on “developing great new mobile services that give people even more options for connecting.”
Zuckerberg also claimed that WhatsApp is “used by over 450 million people on every major mobile platform,” and that “more than 1 million people sign up for WhatsApp every day and it is on its way to connecting one billion people.“
Even if those growth estimates do prove accurate, that would still mean Zuckerberg and his Facebook friends are paying $19 for each of those 1 billion connected WhatsApp users. That’s a hefty price, no matter how you slice it, and begs one very obvious question.
Well, for starters, WhatsApp is indeed a brilliant and rapidly ascending mobile messaging platform and application (hence the “app” in the name). As the company’s tag line proclaims on its website, WhatsApp offers its users “Simple. Personal. Real Time Messaging.”
The cross-platform app works seamlessly on any and all smartphones. It’s easily available on Android, iPhone (link to blog), Windows Phone, Nokia and even BlackBerry (remember those?), and empowers all those different phones and platforms to seamlessly message one another.
Most importantly, WhatsApp allows users to exchange messages without having to pay a penny for standard SMS text messaging, since it utilizes the same internet data plan its users access for email and web browsing. In addition to this basic text messaging function, WhatsApp users can create groups and send each other unlimited images, along with video and audio messages.
Secondly, this is a classic case of “if you can’t beat ’em, buy ’em.” Much as Facebook did with photo-sharing service Instagram back in April of 2012, social media’s Big Fish decided to gobble up an agile, quick – and potentially devastating – competitor in the ever-expanding sea of online technology. Not only had WhatsApp established itself as the largest cross-platform mobile messaging service in the world, but it had been luring its new users – many of whom are teenagers – further and further away from Facebook, along with Twitter and other previously established social media networks.
By first absorbing and integrating Instagram and now WhatsApp, Facebook has diversified its array of services and expanded its portfolio. Of course, they’ve also absorbed and acquired a collection of brilliant and driven tech professionals like 37-year-old co-founder Jan Koum, who worked at Yahoo! for years before founding WhatsApp in 2009.
It’s just that this purchase was made for a reported $19 billion – or a cool $18 billion more than Facebook paid for Instagram. And no matter how you slice it, $19 billion is certainly a staggering amount of money. A staggering amount of money that one could do a lot of different, big things with.
There certainly doesn’t appear to be anything like friction between Zuckerberg and Koum, who amazingly once applied for a job at Facebook…only to be rejected. In fact, the pair was spotted celebrating Facebook’s acquisition of WhatsApp in Barcelona, Spain – with Korean pop star and “Gangnam Style” sensation Psy.
(Interestingly enough, the second co-founder of WhatsApp, Brian Acton, was also once turned down for employment at Facebook. As well as Twitter.)
Thirdly, because they can. Like internet search and advertising giant Google, Facebook is an increasingly massive and far-reaching enterprise. Not to mention a company that raked in $7.87 billion in overall revenue in 2013 – a surge of 55% over 2012 revenue figures. That’s big business, folks. And good businesses are always looking to grow their business even further.
Much like Facebook has remained focused on the big picture when it comes to social networking and advertising on social media, we’d advise you to do the same. And here at Amplitude Digital, we’re here to help. Right away, with no time wasted.
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