Facebook (FB) has made massive moves and now provides more services for its global audience. The social media giant continues to position itself as not only a dominant social media platform, but now has interests in being the best in text messaging. This week’s headlines were filled with news of the recent acquisition for a low-cost mobile text messaging service provider, called WhatsApp.
According to the New York Times, Facebook received approval from the European Union (EU) that allows the social media giant to complete its $16 billion acquisition of WhatsApp in a deal that could end closer to $19 billion. Before Mark Zuckerberg, founder of FB, could move forward clearance from the Federal Telecommunications Commissions (FTC) was required and the EU.
The EU regulates European competitive laws. The goal of the union is to protect collective European interests by regulating the amount of power given to U.S. companies. If Zuckerberg was unable to gain approval from the EU it could have slowed merger progress and caused additional delays.
Now, FB has captured a stake in the text messaging trend. Data shows global text communications with smartphone users is growing.
More people are shifting their social media time between the FB Messenger app and text messaging applications for mobile devices. To quickly satisfy users who are looking for alternative ways to communicate with friends, Zuckerberg decided that if you cannot beat them, purchase them. This week finalized a chain of events to close the company’s new acquisition of WhatsApp.
It has easily become its largest acquisition when compared to the 2012 purchase of Instagram for $1 billion. How popular is FB Messenger when measured against WhatsApp? According to Google Play, FB Messenger has 9,805,134 downloads with a 3.9 percent out of 5 percent positive review rating and WhatsApp has 18,551,561 downloads and stands with a 4.4 percent rating.
The move, according to the New York Times, is to ensure the social media company remains relevant to global users as they find creatives ways to communicate with each other on alternative social media platforms. Similar to how Facebook, Inc. maintained managing control when it was acquired by companies such as Microsoft in 2007, it is “business as usual.” WhatsApp has agreed to continue to manage and operate the text messaging application.
According to the Washington Post, unlike FB, WhatsApp does not collect names or addresses. The only data it collects for authentication is the user’s phone number, which the company says is necessary for authentication. With a $1 annual subscription and an audience that is targeted to hit 1 billion in 2015, WhatsApp co-founders Brian Acton and Jan Koum have no intentions of making any changes or selling information and they “intend to keep it that way.” Many may wonder why, if WhatsApp does not collect data, then what interests does FB have in telecommunications?
Facebook has dominated the data business. Acquiring WhatsApp allows the company to strategically position itself to dominate in the communications business as well. Target users of the app are 18-34 years old. The company understands a need to allow people to communicate one-on-one. With this merger, Facebook provides more services and caters to this audience’s needs. According to The Motley Fool, expectations are that WhatsApp users will continue their interactions and conversations on FB, but not everyone is happy with the merger.
Telecommunication providers are working with the EU to contract concessions to the leading social media company. The European Commission (EU) gave Zuckerberg “unconditional clearance,” which is what was needed to finalize the deal with WhatsApp. Although the EU sees no competitive threat in the merger, many telecommunication providers are upset, leading to the chance that as Facebook provides more services to users, it may add to a consecutive fifth year of declines to the telecommunication industry’s revenue.
By Carolette Wright