Say What?: Facebook Acquires WhatsApp For $19B
Facebook shelled out a ton of cash to buy up one of its chief rivals in mobile messaging.By Christian Bryant | February 19, 2014
In one of the most expensive tech acquisitions in the last decade, Facebook purchased mobile messaging app WhatsApp Wednesday for $19 billion.
WhatsApp allows users to exchange messages with each other over the Internet without having to pay wireless carriers for messaging. The company claims 450 million people use the service and that number is growing by a million every day.
That's a big deal for a company like Facebook, which said in a statement: "The acquisition supports Facebook and WhatsApp's shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies."
The acquisition is Facebook's largest yet. The company bought Instagram for $1 billion in cash and stock in 2012.
As Joshua Benton — director of Harvard's Neiman Journalism Lab — puts it, the WhatsApp acquisition is worth "19 Instagrams, 76 Washington Posts, or 271 Boston Globes." (Via Twitter / @jbenton)
Facebook doesn't say in its statement exactly how it plans to use WhatsApp. According to WhatsApp co-founder and CEO Jan Koum, nothing will change and the company will continue to operate out of its Mountain View, Calif., headquarters.
But CNET writes, "The astronomical price tag demonstrates just how eager the social network is to subsume one of its largest rivals." They add that the 5-year-old WhatsApp "offers a more insular social networking experience beloved by youngsters and foreigners."
A writer for TechCrunch said Facebook's stock took a 5 percent dip after the announcement, possibly because investors saw the company had to spend money to spur growth. But he adds: "It will be hard for anyone to complain about Facebook's user growth with the twin engines of Instagram and WhatsApp on board. ... Call it reinvention by spare parts."
The Wall Street Journal reports if and when the deal closes, Facebook will pay $12 billion for WhatsApp's shares, $4 billion in cash and $3 billion in unrestricted stock units to WhatsApps founders and its 55 employees.
Koum will also join Facebook's board and co-founder Brian Acton will have the pleasure of seeing a company that turned him down for a job in 2009 shell out billions for another company he helped create. (Via DLD, Twitter / @brianacton)