The Secret Why Facebook Buys WhatsApp for $19 Billion!

Presentation By: Aiman

Facebook continues to build upon its colossal empire through strategic acquisitions, with instant-messaging platform WhatsApp the latest service to be snapped up by the social media giant.

Facebook will pay $16 billion – $4 billion cash and $12 billion in stock – for the deal. The agreement also provides for an additional $3 billion in restricted stock unitsto be granted to WhatsApp’s founders and employees that will vest over four years subsequent to closing.

Over 450 million people use WhatsApp each month, 70 percent of whom are active daily users. The app is currentlyadding more than one million new registered users per day.

The acquisition supports Facebook and WhatsApp’s shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies.

FB CEO Mark Zuckerberg said: “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable.”

The WhatsApp deal far exceeds the $1 billion that Facebook paid to acquire Instagram in 2012, as well as the $3 billion offer it made for Snapchat…which was turned down late last year.

What does this mean for WhatsApp users?

According to a WhatsApp blog post, the company will remain autonomous and operate independently. Users can continue to enjoy the service for a nominal fee, anywhere inthe world, on any smartphone.

No advertising is on the horizon either!

Why this deal’s smart for Facebook

The rumour mill re users abandoning Facebook en masse has been in full swing over the past six or so months, meanwhile statistics for various IM platforms – including WhatsApp – indicate solid and steady growth.

Facebook, which recently turned 10, is crafting a clever contingency plan by collecting popular social networks outside its own. The company’s Messenger app – while stillpopular – came a little too late to the IM game…costing it a substantial loss of market share. The gap between Messenger and WhatsApp user numbers, too wide to bridge, ultimately left FB with two options – throwing in the towel for the instant messaging game, or throwing a heap of cash at a competitor.

With over 1.2 billion registered users, Facebook is the largest social network in the world – some say it’s too big to fail, but it’s clearly taking no chances.

Do you use WhatsApp and/or Messenger? Which do you prefer and why? Please leave your comments below.

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