The biggest social Networking site Facebook have taken over the internet-hosted messaging service WhatsApp for a total sum of $19bn (£11b) in cash and shares. It will make the founders of the company over-night billionaires.
WhatsApp is a messaging service available on all major mobile phone platforms and has proved popular with users trying to avoid high SMS (text messaging) charges as it sends the messages over the internet. The app comes free for a year and then asks for a fee of just $0.99 for the next year. With 450 million monthly users and a claimed 1 million joining every day, WhatsApp is the biggest and most popular app of its kind.
But is it worth $19bn?
The deal is Facebook’s biggest every acquisition and has left many wondering how on earth Facebook are going to get their money back.. Some options they have are placing advertising on the App, integrating the service into Facebook or just putting up the price. However, Mark Zuckerburg, Facebook founder, has said that none of these are going to happen and that the service will continue to run independently from Facebook.
Zuckerburg did say that he predicts WhatsApp is on track to have 1 billion users and if he wants to make a return on his investment, this growth has to continue.
Zuckerburg did say that he predicts WhatsApp is on track to have 1 billion users and if he wants to make a return on his investment, this growth has to continue.
System Failure!
WhatsApp hasn't got off to a great start under Facebook’s rule, however, with their whole system going down for hours on Saturday evening– a high traffic time.
The team behind WhatsApp quoted ‘Server issues’ as the reason for the problem before eventually tweeting:
“WhatsApp service has been restored. We are so sorry for the downtime”.
“WhatsApp service has been restored. We are so sorry for the downtime”.
During the downtime, users of the service took mostly to Twitter to complain about the problem.
So, a good move from Facebook?
WhatsApp is a growing business with potential to generate millions and millions in revenue. But the price tag of $19bn is too much. Facebook won’t be able to make a return without putting ads on the service. However, people don’t like ads– especially on apps and so that will most likely lead to a fall in the growth and usage of the app.
Destroying the competition?
One interesting reason for Facebook’s takeover of the app that has been thrown about is that Facebook want to get rid of WhatsApp and get its users back on their site! Of course, this is total rubbish (we hope!) and would be a stupid idea for a number of reasons.
Firstly, Facebook wants to keep users happy not turn them against them! And secondly, it wouldn’t work. Another App would come along and replace it.
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