If Facebook can't have Snapchat, it'll reach deep into its
pockets to buy the next best thing.
Late Wednesday, Facebook announced that it will buy the
popular instant-messaging app WhatsApp for a staggering $19 billion sum -- $4
billion in cash and approximately $12 billion in stocks upfront, plus another
$3 billion in restricted stock over the next four years.
Facebook has shown a keen interest in developing or, with
its $173 billion valuation, outright buying mobile messaging apps. Last year,
Snapchat, a 2-year-old app that allows people to send disappearing photos and
videos to one another, rebuffed a $3 billion offer from the social network.
But the 5-year-old WhatsApp is far more established, and has
fetched its owners a far greater sum. This month, it had 450 million monthly
users, having added 100 million of them in the last four months of 2013 alone.
WhatsApp is essentially a replacement to traditional text
messaging. But unlike costly texts, which eat into cell phone owners' data
plans, WhatsApps messages are sent over the Internet if connected to WiFi
"Our mission is to make the world more open and
connected," Facebook CEO Mark Zuckerberg wrote on his Facebook page.
"We do this by building services that help people share any type of
content with any group of people they want."
"More than 1 million people sign up for WhatsApp every
day and it is on its way to connecting one billion people," he added.
Zuckerberg promised that WhatsApp will operate independently
within Facebook, similar to how the photo-sharing app Instagram has been kept
separate from Facebook proper after it was acquired for $1 billion in 2012. The
social network has its own well-used messaging app, called Facebook Messenger,
that Facebook has pushed its members to download over the past year. Zuckerberg
said that Messenger and WhatsApp will not be merged.
Aside from Messenger, Facebook's efforts to grow in
messaging have fallen flat. Poke, a Snapchat clone that also lets people send
disappearing messages, failed to gain traction when released at the end of
2012. Instagram Direct, a recently introduced and widely touted Instagram
feature lets people privately share photos, also doesn't seem to be well used.
So far, WhatsApp has forgone ads and instead made money by
charging 99 cents to cell owners after 12 months of use. The app is initially
free to download and is popular among young people who want to send photos and
texts to friends abroad without being hit with high international data fees.
The subscription fee is new territory for Facebook, which over its decade-long
existence has reiterated again and again on its homepage that it is "free
and always will be."
In a blog post, co-founder and CEO Jan Koum, who founded
WhatsApp with fellow former Yahoo executive Brian Acton in 2009, insisted that
"nothing" will change for customers. That includes ads: "you can
still count on absolutely no ads interrupting your communication," he
wrote. "There would have been no partnership between our two companies if
we had to compromise on the core principles."
