Facebook has bought messaging app WhatsApp in a deal worth a total of $19bn (£11.4bn) in cash and shares.
WhatsApp has more than 450 million monthly users and is popular with people looking to avoid text messaging charges. It allows users to send messages over internet connections, thereby avoiding text messaging fees. The deal comes amidst a growing view that many people are migrating to instant messaging sites such as WhatsApp and Snapchat in preference to Facebook.
WhatsApp claims it is currently registering one million new users a day and some commentators speculate it will soon reach a billion customers. The value of the app to Facebook is its users: affluent Europeans, younger people, and those who would not normally use social media sites.
What is unclear is how Facebook intends to monetise the app. WhatsApp’s founders have reiterated their opposition to carry adverts, Facebook’s major source of income, and its subscription fees are nominal. Therefore, the real commercial value is likely to come from integration between the app and Facebook.
Prior to this acquisition, Facebook’s biggest purchase had been Instagram for $1bn in 2012. It had also reportedly offered $3bn to acquire photo messaging service Snapchat but this offer was rebuffed.
The acquisition follows the $900million deal which saw Viber, a similar instant messaging service, being purchased by a Japanese company, Ratuken. Time will tell which proves to be the better value in the long term.
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