What: Facebook buys Instant Messaging Services WhatsApp for US $19 billion in cash and stock.
Why it matters: WhatsApp is a wildly popular mobile messaging services in many parts of the world, particularly in the U.S. Hispanic market, Latin America and Spain, where its users often use the verb “guatsapear” to refer to the action of communicating through the application. WhatsApp has more than 450 million user. With the purchase Facebook considerably expands its clout in the all-important mobile media sector. In addition, Facebook snaps a very significant asset from competitor Google who is trying to expand in the mobile space. WhatsApp is a service free of advertising. A WhatsApp founder said that the service will continue to operate without advertising.
Social Networking giant Facebook announced the acquisition of the instant messaging app WhatsApp for US $ 19 billion, according to information submitted to the Security and Exchange Commission (SEC). The purchase will be financed with a partial payment in cash as well as shares of the social network. According to the Associated Press, Facebook has announced that it will pay US $12 million in shares and about US$ 4 million in cash for WhatsApp. In addition, the transaction includes US $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees over four years.
WhatsApp now lets users send photos, videos, and audio messages, as well as share their location using their phone’s built-in GPS. It also supports group chats, something SMS messages were never able to do, and lets users broadcast important messages to huge lists of contacts – though it’s up to them to define what qualifies as important.
The social network, which turned 10 earlier this month, said it would keep WhatsApp, with its’ 45o million users base, as a separate service, as it did with Instagram.
Will WhatsApp now carry advertising?
WhatsApp, an application available for iOS, Blackberry, Windows Phone, Android and Symbian, was founded by the Ukrainian Jan Koum and NorthAmerican Brian Acton, who worked together in Yahoo! for more than 20 years before becoming independent. The startup was released in 2009 in Silicon Valley (California), before smartphones boom. Nowadays,it is competing against messaging line and WeChat.Koum is the CEO of the firm, which last December recorded 7 million inbox messages and 11.000 outbox messages in just one day. The communication service has more than 450 million monthly active users worldwide and over 320 million daily active users.
The application’s co-founders have a principle of avoiding advertising in the messaging service, WhatsApp official site highlighted. “We know we could do what most people try to avoid each day, that is to avoid publicity,” says the site.
90% of Facebook sales come from ads. Last fall, Mark Zuckerberg’s social network placed advertisements in the Instagram service, acquired in 2012.
Mark Zuckerberg, the founder of the popular social network, expressed his excitement about the acquisition through his Facebook account:“I’m excited to announce that we’ve agreed to acquire WhatsApp and that their entire team will be joining us at Facebook. Our mission is to make the world more open and connected. We do this by building services that help people share any type of content with any group of people they want. WhatsApp will help us do this by continuing to develop a service that people around the world love to use every day.
WhatsApp is a simple, fast and reliable mobile messaging service that is used by over 450 million people on every major mobile platform. More than 1 million people sign up for WhatsApp every day and it is on its way to connecting one billion people. More and more people rely on WhatsApp to communicate with all of their contacts every day,” Zuckerberg said. “WhatsApp will continue to operate independently within Facebook. The product roadmap will remain unchanged and the team is going to stay in Mountain View. Over the next few years, we’re going to work hard to help WhatsApp grow and connect the whole world. We also expect that WhatsApp will add to our efforts forInternet.org, our partnership to make basic internet services affordable for everyone.
WhatsApp will complement our existing chat and messaging services to provide new tools for our community.I’m looking forward to what Facebook and WhatsApp can do together. I know that we both share the vision of making the world more open and connected.” He added.
Brian Acton Brian, one of the founders, has just published in the Whatsapp blog that the company will continue providing the service without advertising and it will remain unchanged for users.