WhatsApp, a messaging app, was just bought by Facebook for $16 billion. I thought Instagram being bought for “just” $1 billion was unbelievable, so this blows my mind.
My understanding is that it’s simply an instant messaging app that uses the data of the phone instead of the SMS. Lots of free apps do this already, such as Viber, Skype and several others.
WhatsApp is not free, although at $0.99 USD/year (for Android) I’d consider it all but free. I think it’s a one-time fee of $0.99 for iOS.
The article I read said that the app has 450 million users, so Facebook is paying about $28 per user. So yes, they could build an app from scratch but that wouldn’t have that many users. (I thought the same thing when Microsoft bought Skype for $8.5 billion; surely they could have built a VOIP app from scratch for less.)
You also have to remember, it’s not just that they’re purchasing the app, it’s that they’re getting rid of a competitor. WhatsApp (which I’ve never heard of) may not be worth 16b in and of itself, but. That is, I might not buy it for that much money, but facebook may have considered it a threat and that made it worth more to them. Especially if they’re finding that users are using it instead of the FB platform. Now FB is losing ad revenue, add that into the purchase price. Now that they own it, they can throw it away, integrate it into FB, put ads in it, whatever they want.
This line of thinking was likely similar to the Instagram purchase. Again, you or I (or some other company not in the social media business) might not find that these companies are worth this much money, but if you competing against them, it’s different.
I’d also wouldn’t be surprised if the owners of WhatsApp had a non-compete clause to force them out of the social media market for some set amount of time to make sure they didn’t just write another app in hopes that Facebook would just buy them out again.
We’ve been learning about the Facebook “Social Graph”, the vast collection of linkages that are added to whenever a FB user posts something to someone’s page, and thenews travels out to that user’s friends. We’ve also been learning about the truly stupendous amount of information about the user’s activity that can be retrieved from web pages that have Google’s analytics code embedded.
I suspect that the real value to FB was the profiles and buying habits of those 400 million WhatsApp users.
"While the price tag may seem steep at first blush, Facebook is betting it will prove a lucrative long-term investment. The mobile-messaging service could help Facebook generate more growth from younger users that are slipping away, according to FBN Securities Inc. The dollar amount being paid per WhatsApp user is about a third the value Facebook shareholders place on the social media company’s own user base, data compiled by Bloomberg show. "
Facebook has the money so it spent it. Seems akin to the dot com daze.
Brian Acton, the founder of WhatsApp, applied for jobs at both Facebook and Twitter in 2009, and both of them turned them down. I am wondering how much of the money that went to purchasing the company is now in his pockets?
First, is it $16B or $19B? Consumerist reports $16B. CNN (whom I hate) reports $19B.
Anyway, I just started using WhatsApp and like it a lot. As long as it continues to work the way it has, and doesn’t end up requiring a Facebook account, then I could care less.
Yes, the big point about what makes WhatsApp appealing is that it uses data rather than SMS. The world is becoming more global and phone carriers don’t just let you SMS someone in another country on your standard nationwide plan for the same price as your friend down the street. WhatsApp circumvents all that and people from anywhere can message anyone from anywhere else without limitations. Big thing for families and friends that are becoming more spread out across the globe every day.
Just one aspect of the reasons though. People have gone over lots of other more compelling reasons for Facebook to buy it, but that’s why WhatsApp is big in the first place.
Whatsapp not only has 400M users but was also growing by 70% a year. It’s not inconceivable that it could hit a billion users sometime in the next 3 or 4 years and maybe even overtake Facebook in user count within the decade. So while the valuation is $40 or so for a current user, it’s really the implied growth that they’re paying for.
I use Whatsapp for everything. I hardly make any calls, and never use text messages. Everyone I know uses Whatsapp.
Whatsapp is used instead of facebook sometimes, because you can make whatsapp-groups. So I have a group for my family, my inlaws, a group called “Awesome Homies”, a group for a university research project, another friend group called “crazy monkeys”, a group with our neighbours called “the COOL neighbours”, a group with my SO’s colleagues called “EAT CAKE”, a group called “secret surprise party for Anna” and so on. So instead of having a group facebook page where people communicate, we send Whatsapp messages. Socially and also for work/university. It’s much easier to access than a facebook group. You get a message and don’t have to go through the facebook app to access it. So it’s definitely competing, and it’s a better system than facebook currently has.
If it somehow gets integrated into FB though, I will be very upset. Whatsapp is linked to your mobile number, and so I use it for work as well. If I have to allow my colleagues access to my FB? Not happening.
It’s even worse if it works like now, where my colleagues will see my mobile number in whatsapp and message me. If that goes to my FB, and I have no option but to reply via my FB? Not happening. I suspect I may have to annoy some colleagues, and go to SMS for work matters. Not that I’m super happy with my friends’ messages going through FB either.
Agreed. If it becomes connected to facebook then it’s game over for whatsapp, afaic.
I must admit, though, that that is often more easily said than done. I said that about the facebook thing that marks who has read a message. UUGH that freaks me out. I’d rather not use facebook for messages for that reason, but as that is simply what everyone uses I am forced to stick with it. I tried using an app that should block that shit, but it doesn’t work.
I’m astounded it allegedly has 450m users per month. I know one person who uses it, and the only reason I know the product exists is because that person suggested I join it to talk to them more easily. I declined, not because I don’t want to talk to that person (we email regularly) but because I’d never heard of the app before and a cursory internet search didn’t turn up anything that led me to believe it was a Big, Reputable Product.
And even if most of the deal is for share options - $4 billion dollars in cash is an obscene amount of money to be changing hands for this sort of thing. I’m pretty sure you could quite literally buy a small island country for that and still have enough left over to fit out the world’s most pimpin’ real-life supervillain lair in a hollowed-out volcano there too.
