$19 billion. It’s hard to imagine right? I can barely visualize $19,000 so forgive me for sounding even more shocked than most, but it is just an astounding figure that many people have grown too accustomed to seeing in blockbuster tech buy-outs in recent years. Google/Motorola, Verizon purchasing it’s 45% back from Vodafone, or even other purchases made by Facebook, such as the $1 billion spent for Instagram.
Yes, this is a belated examination of the purchase Facebook made for WhatsApp, the thriving global SMS alternative app that has a puntastic name and a whopping 450 million active users, but with no real revenue. I’ve waited a bit for the dust to settle on purpose. There was some major whiplash through all of Wall Street and investors worldwide over the seemingly over-priced purchase Facebook made for an app that could be seen as nothing more than a competitor to the messenger app Facebook has for it’s own business. To have such a narrow view of the purchase would be a hasty, and poorly guided decision.
This purchase is Facebook doing exactly what they have set out to do since Mark Zuckerberg made Facebook go live back in February of 2004. Since the beginning, Facebook has existed for the sole purpose to connect the world in every way imaginable with absolutely no care about geography. It makes perfect sense for Facebook to grab up a messaging app that has grown at even four times the pace that Facebook did in it’s time, and also allows users to communicate across the globe. Even I can attest that the app is my main communication to one of my best college buddies who resides in Spain. When you’re over an ocean away, and a messenger attached to a whole social network like Facebook isn’t practical, WhatsApp makes you feel exactly like it wants, like you’re just simply texting a friend. It’s a brilliant and intuitive design and it is only going upward from here.
It is possible that Facebook doesn’t even mind if the app ever becomes profitable, as Instagram hasn’t done so, but it will increase the influence that Facebook has over the global social landscape and that is all they’re after. The more pieces of pie they consume, the more people will visit Facebook, and likely in droves. The underlying numbers show a smart reason behind the purchase. The percentages of WhatsApp users that log onto it’s service sets at 70%, which is even higher than the 61% that Facebook wields. That shows that even while growing by a massive amount, WhatsApp has retained constant users, and that is exactly what Facebook wants. Active growth is the only thing that can spurn on Facebook’s own cause, and please stockholders at the same time. This is a positive step in that direction.
For those of you worried about Facebook’s bottom line, don’t panic. A majority of the purchase was made in stock that will be absorbed over the coming years and long forgotten. The instant whiplash was expected, but most likely, this will become an excellent business move given the great infrastructure that WhatsApp will now get to use to continue it’s growth and become to messaging what Instagram is to pictures.
Already, WhatsApp has added in voice messaging. Just think of what they will be able to do with a few months to bounce off the minds at Facebook. I do believe soon enough, Mark Zuckerberg claiming that $19 billion was a cheap purchase will come to be a truth and one of the smartest and most relevant purchases ever by Facebook.