Facebook acquires WhatsApp in $19bn deal

Facebook has acquired messaging service WhatsApp in a deal worth $19bn in cash and shares

Facebook has acquired messaging service WhatsApp in a deal worth $19bn in cash and shares, following a recent unsuccessful offer of $1bn made by Google.

WhatsApp claims to be registering one million new users a day and has 450 million active users who are keen to avoid text messaging charges.

It allows users to send unlimited free text and picture messages, and is among the world’s most downloaded mobile apps.

Facebook’s biggest acquisition to date since it bought Instagram for $1bn in 2012 is believed to be aimed at tapping into WhatsApp’s younger membership in a greater number of countries, reports the BBC.

Analysts believe the acquisition is consistent with Facebook’s aims to dominate in mobile apps, messaging apps and emerging countries.

WhatsApp is particularly strong in Europe and South America with its market penetration thought to top 80% in countries including Brazil, Germany, Portugal and Spain, reports the Guardian.

According to mobile marketing and research firm Jana, the app is the most used messaging service in India, Brazil, Mexico, Nigeria and South Africa, reports Engadget.

The Information, which got a more in-depth look at Jana's research, shows that Facebook Messenger usage is far, far lower in those same countries.

Some analysts believe the deal is also aimed at enabling Facebook to access the lucrative text-messaging market, although it is not yet known how it plans to do that.

While the bulk of Facebook’s revenue comes from advertising, WhatsApp is available free for the first year and at a $1 subscription thereafter.

Following the announcement of deal reportedly put together in eleven days, Facebook founder Mark Zuckerberg said he had no plans to place advertising on WhatsApp.

WhatsApp co-founder Jan Koum, who will become a Facebook board member, said he plans to operate the firm "independently and autonomously".

Once the deal is finalised, Koum and co-founder Brian Acton are set to become Silicon Valley's newest billionaires.

It remains to be seen if WhatsApp will prove to be worth $19bn, but some analysts believe the move by Facebook is nothing short of a survival tactic.

ITV news quotes Will Stewart of the Institution of Engineering and Technology as saying that all app types rise and fade, meaning established social media formats such as Facebook will be overtaken by something new.

“Picking up candidates that might have ultimately replaced them may be a good survival strategy for a while. Facebook has been around a while now so the real question is what comes next,” he said.

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