Facebook’s bought Whatsapp for $19 billion. Why?

Facebook’s bought Whatsapp for $19 billion. Why?

Facebook WhatsApp

If you can’t beat them, buy them.

So, as you’ve probably heard, Facebook’s bought Whatsapp for Approximately 19 Instagrams ($19 billion) in what I think is going to be the largest tech acquisition of the year.  Whatsapp has been fighting off offers for acquisition by firms like Google and others since its inception.

Over the last two years Facebook’s been trying to expand into more and more services, even position itself as a replacement for other necessary services like SMS and photo management/sharing.  Their first attempt was the HTC First and a custom flavour of Android that was simply their Facebook Home app on top of Android 4.2, then the release of Facebook Home on the appstore.  The First was pulled from the market within a couple of months and development of Home seems to have stagnated.  For all intents and purposes these failed.

Enter Phase 2 of Facebook’s plan: divide and conquer.  Instead of channelling all of Facebook through its app the company’s new plan is to break up separate services into individual apps and serve their users that way.  The new Messaging app, for instance, is fantastic and is separate enough from the main app to make it useful as any chat app, not just a Facebook chat app.  You no longer need a Facebook account to use it, but can tie it instead to your phone number – a la Whatsapp.  Then, they bought Instagram.  Their second app, Paper, is a news reader that launched to rave reviews and has been hailed by many as the app to replace Facebook itself.

But why WhatsApp?  Because Facebook Messenger isn’t cutting it.   WhatsApp has 450 million monthly active users and its traffic is approaching the total global SMS telecom volume.  For many it has simply replaced SMS, something you can see very clearly here in Malta.  And despite all of Facebook’s efforts it hasn’t managed to damped WhatsApp’s slow but steady rate of growth, now exceeding 1 million new registered users per day.  As a result Facebook’s become a bit of a Disney, posits Kara Swisher at Re/code (linked below).  It’s got a lot of services catering to a lot of different segments, but with WhatsApp it’s got that one thing everybody needs, and everybody uses.

So, if you can’t beat them: buy them.

Further Reading (also References):

Leave a Reply