Two weeks ago, Facebook chief executive Mark Zuckerberg met with Jan Koum, the founder of WhatsApp, over dinner in California, and the two men did something extraordinary.
Two weeks ago, Facebook chief executive Mark Zuckerberg met with Jan Koum, the founder of WhatsApp, over dinner in California, and the two men did something extraordinary. Zuckerberg made an offer to buy WhatsApp for a total of $19 billion (£11.4 billion) in cash and stock.
That news was kept quiet until last Wednesday, when Zuckerberg confirmed the deal in a conference call.
No one ‘has ever done something like this’
The deal was unexpected by followers and analysts of the social media world.
“No one in the history of the world has ever done something like this,” Zuckerberg said in that call according to a report from Reuters.
In a statement from Facebook, Koum would join Facebook’s board of directors, and said the acquisition of WhatsApp would be operated similarly to the Instagram deal, famously made in April 2012, in which WhatsApp would not be merged with Facebook’s Messenger app and remain a standalone app.
According to a report from the BBC, WhatsApp charges $1 (£0.60)a year for a subscription, but also offers a free model.
“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide,” Koum said in a statement. “We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”
WhatsApp currently has 450 million users, according to Facebook’s statement.
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” Zuckerberg said in the statement. “I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected.”
After this deal was announced, the buzz spread about Facebook’s next steps. Many, including the American technology journalist Larry Magid, have said that things can happen to Facebook with the acquisition of WhatsApp.
The more users, the better
In an interview with Radio 4’s Today programme, Magid said that WhatsApp will bring Facebook the “numbers, fast growth, the cool factor and a great international audience.”
Though, Magid added, the price was staggering.
“It’s staggering,” Magid said. “I don’t understand how you justify $19 billion.”
Facebook has long attempted to gain a significant mobile strategy, as well as expand audiences, something the social network still faces challenges with.
Facebook’s next acquisition could be of the photo app Snapchat, which the social network has reportedly offered up to $3 billion (£1.8 billion) to purchase, the BBC report adds. It is unclear if that deal will come to fruition.
As Facebook ponders its next move, the WhatsApp deal is certain to allow Facebook to go one step forward in its dominance of the social media market. Yet, how far can Zuckerberg and his colleagues go?
For now, according to Ben Bajarin, of the California based Creative Strategies, it’s all about the users from WhatsApp.
“They’re growing exponentially – much, much faster than Facebook,” Bajarin told the Today programme. “For Facebook this is a key growth area where, even if they don’t monetise this product, this is a way that Facebook can get the next billion smartphone consumers into their ecosystem, to touch them and engage with them in other ways than just the Facebook platform.”
What do you think of the deal? Would you still use WhatsApp? Have your say in the comments section below.
Image: Sam Azgor / Flickr