# Why is the WhatsApp messaging app worth 16 Billion? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [February 20, 2014, 2:34am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765 "2014-02-20T02:34:13Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Revtim](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/revtim/32/1042_2.png) [@Revtim](https://boards.straightdope.com/u/Revtim)\ **Post date:** [February 20, 2014, 2:34am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/1 "2014-02-20T02:34:13Z")
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. What makes WhatsApp worth 16 Billion to Facebook? ---
**Author:** ![Bijou\_Drains](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bijou_drains/32/2814_2.png) [@Bijou\_Drains](https://boards.straightdope.com/u/Bijou_Drains)\ **Post date:** [February 20, 2014, 3:30am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/2 "2014-02-20T03:30:57Z")
I wonder that myself since I never heard of it until now. I use Android. ---
**Author:** ![tellyworth](https://avatars.discourse-cdn.com/v4/letter/t/977dab/32.png) [@tellyworth](https://boards.straightdope.com/u/tellyworth)\ **Post date:** [February 20, 2014, 3:36am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/3 "2014-02-20T03:36:13Z")
It’s not the app they’re interested in. It’s the users, and perhaps the staff. ---
**Author:** ![GuanoLad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/guanolad/32/42_2.png) [@GuanoLad](https://boards.straightdope.com/u/GuanoLad)\ **Post date:** [February 20, 2014, 4:01am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/4 "2014-02-20T04:01:54Z")
That seems a waste of 15.75 billion dollars that could be used so much more productively. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [February 20, 2014, 4:20am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/5 "2014-02-20T04:20:39Z")
> [@tellyworth](#): > > It’s not the app they’re interested in. It’s the users, and perhaps the staff. 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.) ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [February 20, 2014, 4:21am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/6 "2014-02-20T04:21:42Z")
> [@GuanoLad](#): > > That seems a waste of 15.75 billion dollars that could be used so much more productively. Only $4 billion of the purchase is cash; the rest is stock. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [February 20, 2014, 4:32am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/7 "2014-02-20T04:32:42Z")
> [@Dewey\_Finn](#): > > The article I read said that the app has 450 million users, so Facebook is paying about $28 per user. How do they plan to make back more than $28 per user, though? Are there ads in these instant messages? ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [February 20, 2014, 4:56am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/8 "2014-02-20T04:56:29Z")
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. ---
**Author:** ![Sunspace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunspace/32/1250_2.png) [@Sunspace](https://boards.straightdope.com/u/Sunspace)\ **Post date:** [February 20, 2014, 5:11am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/9 "2014-02-20T05:11:11Z")
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. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [February 20, 2014, 5:19am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/10 "2014-02-20T05:19:41Z")
Whatsapp has free versions. I use it but use Wechat far more. Here’s bloombergs reporting: [Bloomberg - Are you a robot?](http://www.bloomberg.com/news/2014-02-20/facebook-values-whatsapp-like-miracle-drug-real-m-a.html) "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. ---
**Author:** ![Rick\_Kitchen](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rick_kitchen/32/522_2.png) [@Rick\_Kitchen](https://boards.straightdope.com/u/Rick_Kitchen)\ **Post date:** [February 20, 2014, 5:29am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/11 "2014-02-20T05:29:33Z")
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? ---
**Author:** ![sparky\_1](https://avatars.discourse-cdn.com/v4/letter/s/77aa72/32.png) [@sparky\_1](https://boards.straightdope.com/u/sparky_1)\ **Post date:** [February 20, 2014, 5:30am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/12 "2014-02-20T05:30:14Z")
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. ---
**Author:** ![astro](https://avatars.discourse-cdn.com/v4/letter/a/9dc877/32.png) [@astro](https://boards.straightdope.com/u/astro)\ **Post date:** [February 20, 2014, 5:52am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/13 "2014-02-20T05:52:46Z")
[WhatsApp is apparently a really big deal outside the US.](http://www.technologyreview.com/view/524956/why-facebook-thinks-whatsapp-is-worth-16b/) and far larger than Instagram worldwide. > [@](#): > > But Facebook obviously thinks WhatsApp is worth far more, and some of the numbers it shared about WhatsApp’s users indicate why. WhatsApp has 450 million monthly users, 70 percent of which (so, 310 million) use the service daily. Instagram, by comparison, currently has one-third as many monthly active users > [@](#): > > But more than the sheer number WhatsApp chatters, Facebook appears to be interested in the fact that many of the active users of this SMS-alternative are from developing countries. > > “WhatsApp I think is the clear global leader,” said Zuckerberg in a conference call following the WhatsApp acquisition announcement. > > “There are countries [like] Korea or Japan where another messaging service is bigger, but if you look across the world, WhatsApp - across Europe, Latin America, India, a lot of places in Asia - is the clear leader.” ---
**Author:** ![Macca26](https://avatars.discourse-cdn.com/v4/letter/m/13edae/32.png) [@Macca26](https://boards.straightdope.com/u/Macca26)\ **Post date:** [February 20, 2014, 6:41am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/14 "2014-02-20T06:41:56Z")
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. ---
**Author:** ![Shalmanese](https://avatars.discourse-cdn.com/v4/letter/s/45deac/32.png) [@Shalmanese](https://boards.straightdope.com/u/Shalmanese)\ **Post date:** [February 20, 2014, 7:31am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/15 "2014-02-20T07:31:34Z")
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. ---
**Author:** ![gracer](https://avatars.discourse-cdn.com/v4/letter/g/8e7dd6/32.png) [@gracer](https://boards.straightdope.com/u/gracer)\ **Post date:** [February 20, 2014, 9:19am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/16 "2014-02-20T09:19:56Z")
> [@Joey\_P](#): > > 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. > [@astro](#): > > [WhatsApp is apparently a really big deal outside the US.](http://www.technologyreview.com/view/524956/why-facebook-thinks-whatsapp-is-worth-16b/) and far larger than Instagram worldwide. 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. ---
**Author:** ![Tabby\_Cat](https://avatars.discourse-cdn.com/v4/letter/t/6a8cbe/32.png) [@Tabby\_Cat](https://boards.straightdope.com/u/Tabby_Cat)\ **Post date:** [February 20, 2014, 9:26am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/17 "2014-02-20T09:26:55Z")
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. Honestly, I thought Whatsapp was supposed to be the good guys. No ads, users first, and then they sell out to FB? Ugh. [http://blog.whatsapp.com/index.php/2012/06/why-we-dont-sell-ads/](http://blog.whatsapp.com/index.php/2012/06/why-we-dont-sell-ads/) ---
**Author:** ![gracer](https://avatars.discourse-cdn.com/v4/letter/g/8e7dd6/32.png) [@gracer](https://boards.straightdope.com/u/gracer)\ **Post date:** [February 20, 2014, 9:59am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/18 "2014-02-20T09:59:12Z")
> [@Tabby\_Cat](#): > > 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. 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. ☹ ---
**Author:** ![Martini\_Enfield](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/martini_enfield/32/11123_2.png) [@Martini\_Enfield](https://boards.straightdope.com/u/Martini_Enfield)\ **Post date:** [February 20, 2014, 11:22am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/19 "2014-02-20T11:22:55Z")
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. ---
**Author:** ![MrDibble](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mrdibble/32/114_2.png) [@MrDibble](https://boards.straightdope.com/u/MrDibble)\ **Post date:** [February 20, 2014, 11:35am UTC](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765/20 "2014-02-20T11:35:46Z")
It’s very big here in South Africa, but I don’t use it myself. [Next page](https://boards.straightdope.com/t/why-is-the-whatsapp-messaging-app-worth-16-billion/681765.md?page=2)