The founders and early employees of the popular smartphone application WhatsApp have moved on to millionaire, or possibly billionaire, status after making a high-dollar deal with Facebook. A simple, no-frills messaging app that is incredibly popular but not incredibly lucrative was so desirable to certain internet giants they were willing to pay billions to acquire it, and one of them did. For $19 billion, to be exact, leaving everyone to wonder “what in the world could be so valuable about a messaging app?”
WhatsApp is popular around the world, from Brisbane to Baltimore (though notably less popular in Asia). The service allows users to send chat messages and photos in a familiar phone texting format, the difference being that the service is through the internet, unlimited, and basically free. WhatsApp did for text messaging what Skype did for voice calls: it took to the internet and dropped the charges.
Users pay an annual fee of 99¢ after the first year, which is free, but the app has no ads, and obviously, collects no advertising revenue. Even though it now has 450 million users, its revenue potential is relatively small compared to what it was worth to Facebook, in terms of direct revenue at least. Google wanted WhatsApp, too, and they reportedly offered $10 billion before Facebook got in the game, and were willing to go higher still before the acquisition was announced.
So what could be so valuable about a free messaging service to internet giants like Facebook and Google? Just for comparison, check out this short video by Mashable which covers a number of things Facebook could have purchased for the same price they paid for WhatsApp:
According to Mark Zuckerberg, the popular messenger has something Facebook (and its popular messenger) does not, and Facebook wanted that something. It is the only widely used app with more engagement and more daily users than Facebook. While these facts are true, they hardly scratch the surface of what many are speculating to be the real motivation behind the high-dollar deal Facebook made with the acquisition of WhatsApp.
Was the app a threat to Facebook? Speculation from BuzzFeed pointed out the messaging app came closer to killing Facebook than any other competitor, and all without aggressive marketing. It appeals to markets Facebook has had trouble breaking into, and could thus extend the reach of a company which strives to dominate social media. However, along these lines it is still hard to see how purchasing the add-free app was a good strategy for Facebook, who is primarily concerned with attracting more advertisers.
An alternative speculation, though it borders on conspiracy, seems to solve the above mentioned mysteries. According to The Droid Guy, what Facebook and Google really wanted to acquire with the free messaging app was information. When it comes to winning at the advertising game, the more targeted information the better. Basically, WhatsApp was like the most enormous un-tapped cavern of mineral-rich messages and they both wanted the rights to mine it; Facebook just happened to be the one with the high-dollar deal.
By Mimi Mudd