Facebook to Buy WhatsApp, Wants to Own Your Text Messages

| Analysis

Facebook is spending a staggering US$19 billion to buy the text messaging app WhatsApp. The company has just over 50 employees, but a user base that dwarfs Facebook, a strong presence in markets where Facebook is weak, and daily message counts that rival the world's cell service providers.

Facebook: All your communication are belong to usFacebook: All your communication are belong to us

WhatsApp launched five years ago to give people a way to send and receive text messages without dealing with carrier caps and potential fees when chatting internationally. In those five years, WhatsApp has grown to over 450 million active users, 320 million of which use the service daily around the world. In comparison, Facebook has about 145 million users.

Snapping up WhatsApp gives Facebook a presence in markets where it doesn't have a strong presence, and ultimately under its control -- at least on some level. It also means that Facebook has access to one of the largest text messaging segments, which must look pretty enticing to the social networking company.

Facebook says it will let WhatsApp continue to operate just as it did before the buyout. WhatsApp co-founder Jan Koum said,

WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

That means Facebook will most likely let WhatsApps continue to operate much like Instagram: autonomously, but with strong ties into Facebook. That doesn't, however, mean WhatsApp user information will stay out of Facebook's hands.

While Facebook is no doubt glad they're getting the users WhatsApps already has, the company is looking to the future and the million new users that join the service each day. That fast growing number has Facebook CEO Mark Zuckerberg excited.

"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable," he said.

In other words, Facebook sees WhatsApp as a strong long term investment. Buying WhatsApp gives Facebook a new way to grow in markets where it isn't dominant, and it gets control over the text messaging service that's on par with cell service companies and still growing.

With the pontential for a billion users, WhatsApp looks like an incredibly valuable investment for Facebook. Taking over a service that sends 19 billion messages a day puts Facebook in a strong position to be the worlds largest messaging company. That sounds like an investment that's worth $19 billion to Mr. Zuckerberg.

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Comments

brett_x

This acquisition brought to you in part by iMessage (and Apple’s failure to push it outside of their ecosystem).

Lee Dronick

I wonder if it could be done Brett, at least in its current form and without major changes. From what I can deduce an iMessage is more akin to an email than a text message. I like using iMessage because I am not restricted to sending and receiving texts on the iPhone.

Anyway, this accquisition by FaceBook is probably more about them wanting control than a failure on Apple’s part. Of course perhaps the reason Apple is keeping iMessages inside its walled garden is to entice more people into the garden.

Jamie

I’ll bet it doesn’t stay free, even if the price is information. It will have ads at the very least, Instagram gave similarly hollow assurances after their acquisition. I don’t care to have Facebook (or Apple for that matter, though I still trust them with my information more than any others, for whatever that’s worth) as a public utility, thanks very much. These are damned curious times. wink

In my experience, WhatsApp is used most heavily overseas in countries where it’s the only cheap option for SMS, likely not the types of customers Facebook hopes to data mine (oops. That person doesn’t exist, do they? raspberry), and I don’t know what makes them imagine that the younger people that have abandoned their platform won’t in turn abandon the platform they migrated to once it inevitably becomes passé or prohibitively priced to them. There hasn’t ever really been lightning in a bottle, cycles simply begin and end, yet they keep chasing, chasing, chasing it.

furbies

Just looked at the iTunes page for WhatsApp, and it’s free for the first year. Then it’s USD 99 cents a year….

adamC

To recoup the investment FB have to monetize Whatsapp and I am very interested to see how they will do it perhaps like @furbies said 99 cents a year or $10 a year.

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