What Do You Get for $19 Billion?

By: jerry | 03/11/2014

As most of you have heard by now, Facebook recently purchased WhatsApp, a mobile messaging app, for $16 billion, plus another $3 billion in retention bonuses. At lunch recently, a few of us talked about why Facebook might spend this kind of money on an app that many of you may not have heard of before the acquisition. The answer to that is both simple and complex.

So what gives? Here are a couple of things to think about. First, Facebook needs to continue to grow its user base and it has traditionally been weakest in the very geographies where WhatsApp is strongest. Second, with nearly half a billion users, WhatsApp presented a strong challenger to Facebook in both the messaging space (a core component of Facebook) and in the mobile space, where Facebook has been playing catch-up for a long time. If nothing else, this acquisition took a significant challenger off the playing board, much like the Instagram acquisition eliminated a significant mobile/photo challenger.

Finally, there is Mark Zuckerberg’s vision to become synonymous with the Internet for as much of the world as possible. Take a look at this article from ReadWriteWeb for a little more insight.

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