Yesterday the UK woke up to the news that Facebook had swooped in and acquired WhatsApp for up to $19bn. Wowsers. Whether you are Mark Zuckerberg or not, that is no small change. Twitter was awash with WhatsApp maths as everyone tried to understand why Facebook had paid so much. After all, there are no ads on WhatsApp and the plan is to keep it that way, so what’s the attraction?
Jan Koum one of the company’s two founders write in his most recent blog:
We know people go to sleep excited about who they chatted with that day (and disappointed about who they didn’t). We want WhatsApp to be the product that keeps you awake… and that you reach for in the morning. No one jumps up from a nap and runs to see an advertisement.
Many analysts believe that the real value of the acquisition isn’t just that people swap more photos per day on the app than they do on Facebook, but that WhatsApp has more active users in countries where Facebook adoption is low. It’s a big leap to think that a WhatsApp user will suddenly become an avid Facebook user just because, but the logic and potential sort of makes sense.
Of course there could be bigger strategic issues at play here. We’re all assuming this is about Facebook trying to protect its territory, but what if this move actually signals a change in direction for the company? The founders of WhatsApp say that the company will operate independently and not compromise on its original mission, so maybe Facebook will try to do as Google has done and actually move away from advertising with this acquisition? It would make sense that the social media giant would want to diversify, but history has shown us that when moving away from a core competency direct monetisation does not necessarily follow so easily – even if you are one of the biggest brands on the planet.
It will be interesting to see what lies ahead for WhatsApp as part of the Facebook franchise. Having recently tried to acquire Snapchat, Facebook clearly believe that the platform is integral to its future. So perhaps its a simple as buy now, fund WhatsApp’s extension and work out how the service can support its core competencies as they go. But I would bet someone as smart as Mark Zuckerberg has a plan. We just aren’t privy to it yet.
Out if hours Paul is at his happiest drinking wine, eating cheese, travelling the world, playing sport and discovering new music and film.