Facebook Buys WhatsApp

So far, Whatsapp has created a swirl in technology users as well as non technical people to communicate, share and expand businesses. Communication system has become really easy for whatsapp users and till now it’s the most popular messaging system. WhatsApp has grown its customer database from scratch to millions. Different mobile developers such as Android, BlackBerry, iphone, Nokia and Windows Smartphone have made necessary changes in their systems to include WhatsApp as required, supported Application on their mobiles. Even customers ask questions to vendors whether WhatsApp is supported in the phone they are purchasing.

Facebook-buys-whatsapp

The way WhatsApp has taken over online messenger market on mobiles, Facebook is biggest online social networking site. It’s the most popular networking site of which people have grown addicted to. Not only a social media site but it has become a big business platform for businesses all around the world. Social updates, business pages, advertising, messaging and what not facebook is supporting. Facebook is now accepted across the world as mandatory social media site.

Facebook acquired WhatsApp for 19 Billion dollars on 19th February 2014. This is the largest acquisition made by Facebook till date. The deal will be finalized later part of 2014 but even if the deal doesn’t materialize, Facebook will still have to pay 2 billion dollars to WhatsApp.  Out of the 19 billion dollars, 4 billion dollar will be paid in cash and 12 billion dollars in Facebook stock. WhatsApp’s founders and staff will be eligible for another $3 billion in Facebook’s stock which will be paid out if they remain employed by Facebook for four years. But both Facebook and WhatsApp will work independently even after the acquisition.

Motive behind making such a huge purchase:

Even though Facebook has achieved its hold on the social media but like any industry even Facebook faces the issue of losing its relevancy which once gone it will lose its clients and employees. The major motive of Facebook to buy WhatsApp is the growing number of active users for the mobile application. Since WhatsApp has more than 450 million users out of which 70% are daily active, by buying WhatsApp, Facebook has assured itself of continuous relevancy in the ever changing market.

This acquisition raises a question that making such big deal for WhatsApp is the reason to avoid threat to Facebook . Can we say Mark Zukerberg got alarmed to growing risk of WhatsApp capturing Facebook market? Facebook has developed its own mobile messenger application but it cannot reach the number of users WhatsApp has, simply because it is mostly used for communication between Facebook members only and it is not in real time like WhatsApp. Also WhatsApp has a huge presence in developing countries. On the other hand, Facebook has achieved saturation in terms of number of its users in developed world. So with this acquisition Facebook will be able to increase its presence in the developing countries as well.

Since in WhatsApp, you can communicate, share photos, links privately, by buying WhatsApp, Facebook has got its access to these communications which will be very beneficial for the target advertising on the Facebook properties.

There is also a speculation that Facebook might offer voice calling through WhatsApp after the deal is finalized.

Also, if you closely study the deal Facebook is not actually paying 19 billion dollars it is paying most of the amount in the form of shares. Basically it is using paper money which is again of very high value but Facebook does not have to actually raise 19 billion dollars for the acquisition.