Why Did Facebook Buy Whatsapp?

Unless you’ve been living under a rock, you’ve probably heard of Facebook, a social networking site that allows you to connect to your friends online to share messages, images and video posts. Nothing seems to beat Facebook’s popularity. Facebook is second only to Google as the most visited website on the planet, as reported by Alexa.com, an Amazon.com-subsidiary which provides commercial web traffic.

As a company, Facebook is doing well as evidenced by its 55% growth rate or estimated $7.87 billion revenue in 2013. It’s common for thriving companies like Facebook, to acquire smaller companies as part of its strategic expansion. News reports, such as those in Time magazine, account probably “…the biggest Web acquisition in more than a decade…” as Businessweek.com would call it. Facebook bought in February 2014 the mobile messaging company Whatsapp for a staggering $19 billion in cash and stock. It certainly is much more than a web developer’s purchase of dreamweaver templates online.

Now before you fall off your chair from shock, let’s know more about Whatsapp. WhatsApp Messenger, as the software is formally called, is a cross-platform mobile messaging application which provides you the convenience of exchanging messages around the world less the standard SMS fees. You can also send images, videos, audio media messages and even your location utilizing an integrated mapping feature.

The application can be downloaded on every major mobile platform. The app is developed by WhatsApp Inca, “…an early stage technology startup founded in the heart of Silicon Valley.” According to its official blog, Whatsapp supports over 450 million active users per month and over 320 million active users per day worldwide. As of February 2013 or a year before its acquisition, Whatsapp was valued at an estimated $1.5 billion.

Why did Facebook buy Whatsapp? Reports have it that CEO of Facebook, Mark Zuckerberg believes that “…WhatsApp is worth even more than the $19 billion he’s spending…” and that Whatsapp has the potential to grow beyond its 450 million active messaging accounts. There’s definitely power in numbers and Mr. Zuckerberg probably sees the growing number of Whatsapp users as a potential threat to Facebook’s global dominance. Buying Whatsapp effectively removes it as a possible future competitor.

Both companies can view source of immense earnings from their combined millions of followers. Online stores with Facebook accounts can benefit from this development by promoting products to millions of users. One such online store is nomorerack.com. Nomorerack reviews its existing prices in order to come up with better offers.

In its February 19, 2014 official blog entry, Whatsapp formally announced the partnership with Facebook and the intention to continue with the mission to build a cool product used globally by everybody. The entry further states that Whatsapp will remain autonomous, operate independently, and continue to provide add-free communication.

In his February 20, 2014 blog entry, Mr. Zuckerberg expresses his excitement over the acquisition of Whatsapp with the entire team joining Facebook and share a mission to make the world more open and connected.