Facebook is going to acquire WhatsApp messaging app for $19 billion, which is a messaging app with some 430 million users and is sued for sending text, audio, pictures- exactly what you can do on Facebook too. Here are the reasons why Facebook was left with no option but to pay this hefty amount to snap up WhatsApp.
Whatsapp with its userbase of 400 million is already a sizable threat to Facebook which has a user base of 1.2 billion. And since WhatsApp was reportedly siphoning off users from Facebook in the teen age group, Facebook had to do something to stop this erosion of user base.
Facebook even tried to emulate what WhatsApp does by launching its own messenger app which now has around 350 million users but that did not affect the daily growth of 1 million additional users on WhatsApp.
And secondly WhatsApp’s core users are outside US whereas the majority of Facebook’s users are in US. So by acquiring WhatsApp, Facebook has internationalized itself in one go. The international exposure with WhatsApp is huge. The total messaging volume on WhatsApp is more than all the SMS volume of all telecom sector in the world.
WhatsApp allows messaging on wi-fi which means it is attractive to users in poor countries who can not afford mobile calling or texting.
WhatsApp also has an established revenue stream because users have to pay $0.99 after one year of free service. So Facebook can build on this revenue stream in its own ways. And all of this revenue is mobile where Facebook has struggled in the past because it does not have its own mobile OS.