Facebook buys WhatsApp for $16bn

Social media company Facebook has just announced that it agreed to buy OTT messaging firm WhatsApp for $16 billion, including $4 billion in cash and approximately $12 billion worth of Facebook shares. The agreement also provides for an additional $3 billion in stock to be granted to WhatsApp’s founders and employees over a four year subsequent to closing.

There are going to be some very happy workers tomorrow morning.

WhatsApp is growing fast, with over 450 million people using the service each month. Of these, the company claims 70 per cent are active on any given day. And it’s still growing, adding one million new registered users each day. Its messaging volume is approaching that of the entire global SMS market. Not bad for a five-year-old company.

“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide,” said Jan Koum, WhatsApp co-founder and CEO, who will join Facebook’s Board of Directors. “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 is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founder and CEO. “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.”

Rumours first surfaced back in December 2012 that Facebook was in talks to buy WhatsApp, when the service had just 100 million active daily users. Although details of this earlier negotiation are unknown, you can bet that the asking price was somewhat less than $16 billion…

Like all lottery winners since the beginning of time, the WhatsApp team says that “nothing will change as a result of the deal” and that it will be business as usual, with the service remaining autonomous and operating independently.

Writing on his company’s blog, Koum explained that: “We started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us. Our team has always believed that neither cost and (sic) distance should ever prevent people from connecting with their friends and loved ones, and won’t rest until everyone, everywhere is empowered with that opportunity.”

“WhatsApp will complement our existing chat and messaging services to provide new tools for our community,” added Zuckerberg. “Facebook Messenger is widely used for chatting with your Facebook friends, and WhatsApp for communicating with all of your contacts and small groups of people. Since WhatsApp and Messenger serve such different and important uses, we will continue investing in both and making them each great products for everyone.”

Will that mean the WhatsApp service continues to avoid advertising and relies instead on its 99 cents annual subscription? If it is forced to give in to ads, then expect its user base to start contracting – there are plenty of alternatives out there for fickle users.

So where will this leave WhatsApp’s competitors like Line Messenger and Tencent’s WeChat? And how will the Joyn-fixated mobile industry react (Strategy Analytics last month calculated that Joyn/RCS messaging would reach less than 180 million users by 2017)?

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