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Old 20-02-2014
Join Date: Aug 2005
Posts: 822
Facebook to buy WhatsApp for $19 billion in cash

The Social Network puts its hand on different application each month and now this is its biggest acquisition to date.

Facebook strikes a blow to the mobile messaging. On wednesday night, the social network announced the surprise takeover of the WhatsApp application for a staggering 16 billion dollars (11 billion euros), of which 4 billion in cash and $12 billion in shares. The founders and employees of WhatsApp will receive an additional $3 billion in the form of stock options, bringing the total transaction at $19 billion.

Every month, more than 450 million people use WhatsApp in the world, 70% connect daily to send free messages instead of SMS. This is twice the number of active Twitter users. Some 19 billion messages are sent every day, and 34 billion received, as well as texting transiting among telecom operators.

Like the photos application of Instagram, bought at $715 million in Facebook in 2012, WhatsApp will retain its name and independence. The company, founded in 2009, employed about fifty people and had only raised $8 million for its development. Financial results were never disclosed.


"It makes money but the important thing is not monetization. We focused on one day but for now the main goal is that the service WhatsApp works,"explained co-founder Jan Koum. The use of WhatsApp is free for the first year and without advertising, including match abroad, after which access is charged 0.99 cent per year. This success shows the power of the "freemium" model, which attracts a large number of users with a service at first.

The acquisition of WhatsApp reflects the desire to multiply Facebook mobile applications, to establish itself as the center of communications on smartphones and tablets. The social network had also developed a competitor for WhatsApp called Facebook Messenger. Zuckerberg tried in vain to buy Snapchat, another very popular messaging application for $4 billion. Another heavyweight messaging app on smartphones, Viber, was bought last week by Japan's Rakuten for $900 million.

The acquisition of WhatsApp, announced after the close of trading, was greeted with warmth. Facebook lost 2% in after-hours trading to midnight. This is the largest acquisition in the history of the social network, the more important for a mobile application and one of the largest in the technology sector. Google had paid $12.5 billion to buy the mobile manufacturer Motorola in 2011. Microsoft acquired Skype for $8.5 billion and $7.2 billion for Nokia.
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