Social network has been the trend in modern day internet applications. Its easy accessibility through mobile phones, laptops and desktops computers has made it best way to connect, share and chat. The rivalries among the tech industry’s giant have often resembled a ” Game of Thrones”, in which companies such as Facebook, Google, Amazon and Apple constantly try to invade one another’s online kingdom. On February 19th, Facebook took a dramatic step to defend its turf by making a move to acquiring Whatsapp for a whooping sum of $19 billion.
Whatsapp’s price tag is the most ever paid for a venture-backed company and gives start up founded in 2009, a valuation that is greater than that of household names such as Southwest Airlines and Sony.
The deal marks the coming of age of messaging apps which let people send text messages and share photos and other stuffs without incurring charges from telecoms firms and service providers. Whatsapp is free to use for 12months and this cost a mere 99 cents a year. Plenty of other such applications have sprung up, including Viber, which a Rakuten, a Japanese internet giant recently bought for $900 million, and the immensely popular Wechat, which belongs to Tencent, an innovative Chinese Company.
Facebook which is now the leading social network with an active member base of 1.2 billion users has grown over the years. The owner Mark Zuckerberg declared the acquisition of Whatsapp in Barcelona, Spain during the mobile world congress. The 29-year old billionaire and founder of Facebook defended his huge $19 billion takeover of free mobile messaging service Whatsapp, saying it is actually worth more. Announcing the stock and cash purchase on Wednesday 27th of February, a deal that marries his social network of 1.2 billion active uses with Whatsapp’s 450 million users. Asked about the price tag during an on-stage discussion at the February 24th-27th mobile world congress in Barcelona, Spain, Zuckerberg said Whatsapp was attractive as a company by itself and as a strategic fit with Facebook. “I just think that by itself, it is worth more than $19 billion“, said Zuckerberg. “I mean it is hard to exactly make the speech today because they have so little revenue compared to that number“, he concluded. ” but the reality is that there are very few services that reach a billion people in the world. They are all incredibly valuable, much more valuable than that” he added.
Zuckerberg went further stressing hope and gains that the future will bring for the new tie between his Facebook network and Whatsapp. In as much as he believed that there are other applications such as kakao, Talk, Vine and Wechat, which are bringing in about three dollars with just little effort, then Whatsapp could do better if well positioned. The Facebook boss said he and Whatsapp founder Jan Koum shared a vision of connecting everyone in the world to internet, delivering development benefits and in the long term, profits too.
Zuckerberg said that Facebook plans to leave the Whatsapp service unchanged. That there will be no interferance from Facebook to change Whatsapp from what it’s originally known for. “Whatsapp doesn’t store the content, we would be pretty silly if we get in the way of that” said Zuckerberg.
Also the Whatsapp owner had said that the service would launch free voice calls by mid-year, putting it on a par with key competitor Viber which already does so. He also stressed that Facebook did not plan to change Whatsapp, that Zuckerberg really understand that for Whatsapp to be successful, it really needs to stay independent.
It has been a deal done and dusted and Whatsapp now a Facebook property. Zuckerberg who has been successful with Facebook after its initial public offer in May 2012 was on the downside, then it literally had no mobile advertising revenues. But by the end of 2013, mobile devices accounted for 53% of Facebook’s advertising revenue, bringing in $1.2 billion in the last quarter and more than $3 billion over the whole year. Zuckerberg stressed to replicate same fit with Whatsapp.