Why is WhatsApp worth up to $19bn to Facebook ?
With no games and no gimmicks but 450 million active users, WhatsApp represented the biggest mobile threat to Facebook
People will bring their prejudices to the table when judging whether Facebook agreeing to pay up to $19bn for messaging app WhatsApp is a smart deal or not.
Some will see it as the latest evidence of a froth-fuelled social networking and apps bubble, which won’t end well. Others will hail it as the bold, decisive move of a visionary CEO.
WhatsApp may be labeled as the next Myspace or Bebo: bought for big bucks then withering as its users drain away. But it may also be seen as the next YouTube – bought for what seems like a ridiculously high sum, only to thrive so well that price looks like a bargain a few years down the line.Why is WhatsApp worth up to $19bn to Facebook ?
As with any big technology story, people will fit Facebook’s WhatsApp acquisition neatly into whatever their existing narrative is for what’s happening around smartphones, social networking and big tech more generally.
Nevertheless, here are some facts and expert views to help you draw your own conclusions about the impact of the deal.
Multiple Facebook apps in your home screen
When the deal closes, Facebook will own four of the world’s most popular smartphone apps: Facebook itself, Instagram, WhatsApp and Facebook
“Our vision for Facebook is to create a set of products that help you share any kind of content you want within the audience you want. We’re not just focused on improving the experience of sharing with all of your friends at once,” CEO Mark Zuckerberg told analysts during Facebook’s last earnings call.
“One of the things that we want to try to do over the next few years is build a handful of great new experiences that are separate from what you think of as Facebook today.”
If the average person’s smartphone usage tilts towards using a group of apps that mostly do one thing well – messaging, photos, games, whatever – then Facebook wants to be providing as many of them as possible. And if it can’t build successful enough standalone apps, it will buy them.
Facebook bought the simplest messaging app
A Tumblr post by WhatsApp investor Jim Goetz, of VC firm Sequoia, includes a photograph of the note stored on Koum’s desk – a three-line statement of WhatsApp’s guiding principles written by his co-founder Brian Acton:
no adds ethos behind whatsapp
Most of WhatsApp’s rivals – from Line, Kakao and WeChat in Asia to Kik and BBM in the west – have been turning themselves into platforms for everything from gaming and music through to shopping and brand marketing. In a sense, they’re all trying to replace Facebook, in a sprawling, multipurpose sense.
There will be consolidation – of course there will – but it’s less about “company X is now worth Y because WhatsApp was worth Z” and more about what specific messaging apps are worth to specific buyers. Simplicity sealed the deal for Facebook, but will the mini-Facebook platform strategy tempt others?Why is WhatsApp worth up to $19bn to Facebook