Facebook acquires Whatsapp; deal valued at $19 billion

‘Might see flurry of acquisitions in the wireless messaging/chat segment in next few months,’ say industry observers

Feb 21, 2014 03:03:00 PM | Article | Campaign India Team

On 20 February, Mark Zuckerberg, Facebook’s CEO, announced through his wall that the company has acquired the chat service – Whatsapp. On his page he explained how WhatsApp will work with Facebook: "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."

The announcement does not come as a surprise since Facebook was in talks to acquire the chat service. The deal is valued at $19 billion, in cash and stock. Jan Koum, CEO, Whatsapp, will join Facebook’s board of directors.

“WhatsApp had every option in the world, so I’m thrilled that they chose to work with us. I’m looking forward to what Facebook and WhatsApp can do together, and to developing great new mobile services that give people even more options for connecting," Zuckerberg surmised.

On the acquisition, Sanjay Menon, global capability lead and India marketing services lead, SapientNitro, noted, "The WhatsApp acquisition will enable Facebook to achieve a wider youth user base in the mobile segment along with access to real users since it is anchored to a phone number unlike Facebook users. There could be a possibility of intersecting data from both for context-based promotion or targeting. We might also see a flurry of acquisitions in the wireless messaging/chat segment in the next few months. Typically, one would have imagined a company like Google to acquire WhatsApp since they have the infrastructure to leverage this additional massive consumer base to bolt on from mobile.”

Dippak Khurana, CEO and co-Founder, Vserv.mobi, said, "It will be interesting to see if WhatsApp moves away from its subscription model and adopts advertising. After all, in effect, Facebook is going to be able to have access to 450 million verified mobile numbers, many of whom may not even be on the Facebook app. Additionally with Google pushing Hangouts as a default mobile messaging app, Facebook was forced into doing something in the mobile messaging space and this was the best way to capture that market. This presents a distinctive opportunity for Facebook to garner increased user engagement and a greater fillip to their mobile strategy."