Why did Facebook pay $19 billion for WhatsApp?

What do they plan to do with the popular free messaging app?

So you’ve probably heard by now that Facebook have just bought WhatsApp and people all over the Twittersphere are up in arms, proclaiming their immediate departure from the messaging service. A $19 billion deal with Facebook must have been a dream come true for WhatsApp CEO Jan Koum, especially with $2 billion on the table even if it fell through. But why did Facebook pay so much for this app?

The reason Zuckerberg gives, is that he’s “buying the future of smartphones”. There are an estimated 1 billion smartphones in use today, so in 5 or 10 years’ time there could be 5 billion, and the most popular use for these phones? Messaging. Zuckerberg believes that the union of WhatsApp and Facebook will allow both companies to connect more people around the world and strengthen both services. “Facebook is becoming a mobile company,” he says, and “WhatsApp fits this vision perfectly.”

The big question WhatsApp users are asking is; what’s going to change? Jan Koum says: “Nothing.” Are we about to be bombarded by ads tailored to our conversations with our friends? Zuckerberg and Koum both say no. “You can still count on absolutely no ads interrupting your communication,” says Koum. He also stated that “WhatsApp will remain autonomous and operate independently…There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.”

Both Facebook and WhatsApp maintain that monetization is not their priority, and that they have no plans to put ads in the messaging software. WhatsApp doesn’t believe in using ads to bring in revenue, instead users currently pay a small yearly subscription fee to use the service after the first year of use. So are Facebook after the subscriptions revenue? Well, not quite. Koum maintains that they aren’t planning to roll out this subscription charge further; instead they will be focusing on maximising growth.

And growth is something WhatsApp has already seen in spades. With an approximate 450 million users worldwide, WhatsApp has seen phenomenal growth over the past 4 years. “It’s the only app we’ve seen with a higher engagement than Facebook itself”, says Zuckerberg. They are currently gaining more than 1 million new users per day, with its core audience based outside of the US. This means that now Facebook has expanded its international exposure enormously, particularly in countries where data charges are prohibitively expensive and users rely more on communicating over Wi-Fi.

Some users are speculating that perhaps Facebook has seen an opportunity to capture the coveted teenage demographic, who are reportedly leaving Facebook in droves since their parents have joined the social network site. In a recent survey by On Device Research, Facebook Messenger was shown to have lost its lead against WhatsApp as the most popular messaging service in late 2013 and is especially popular with the 16-24 age group.

Alongside this, messaging apps have been big business in the tech industry for the past couple of years, with the rise of apps such as Viber, Snapchat and Kik. It could be said that Zuckerberg simply realised that WhatsApp was a far more successful messaging service than Facebook messenger, and sought to integrate it. Or, in simpler terms; ‘if you can’t beat ‘em, buy ‘em.’

Koum’s message to WhatsApp users remains positive: “Our team has always believed that neither cost and distance should ever prevent people from connecting with their friends and loved ones, and won’t rest until everyone, everywhere is empowered by that opportunity. We want to thank all of our users and everybody in our lives for making this next chapter possible, and for joining us as we continue on this very special journey.”

image: © West McGowan