by Jonathan HaileHave you ever heard of the mobile messaging service WhatsApp? I hadn’t until last week. The app, which sounds like a Budweiser commercial from 1999, made headlines when Facebook purchased it for $19 billion.
I’m no corporate appraiser, but that seems like a lot of money to spend, considering Facebook also purchased Instagram for $1 billion in 2012 and offered the Snapchat guys $3 billion (which they turned down). I had to do a little digging to find out what’s up with WhatsApp.
As it turns out, WhatsApp is a low-cost alternative to high-priced mobile services, at least if you are texting. It has more than 450 million active users. The first year of service is free. After that, it costs only 99 cents a year. It connects people by using 3G and wifi–a huge plus when traveling overseas. Although he is insists WhatApps will maintain its own brand, Facebook CEO Mark Zuckerberg believes purchasing the service coincides with his company’s vision.
“WhatsApp is on a path to connecting a billion people,” Zuckerberg said at the Mobile World Congress. “There are very few services in the world that can reach that level and they’re all incredibly valuable.”
He also feels good about the price tag, claiming the company is worth more than $19 billion. It’s nice that Zuckerberg was able to go bargain shopping, but the question is, “Why did Facebook make this purchase?”
Is it Facebook’s dwindling reputation?
Facebook is going through a bit of an awkward phase. Its Home App for Android was a large failure. The site is bombarded with advertisements and content that seems to be shared over and over again. This isn’t the worst thing, but I still have a terrible taste in my mouth from the nonsensical “Facebook Chair” commercial. Zuckerberg is trying too hard, it seems, and in the process, his company is losing credibility. Many people are abandoning the social network, especially teens, who are leaving by the millions.
To be fair, most things that have been around 10 years tend to lose appeal, but Facebook is so integrated into our society that its disappearance is almost unfathomable. Perhaps the company wants to keep its demise from happening by eating up smaller apps. Instagram, for example, seemed overpriced when it was acquired, but now it’s beating Facebook in the social marketing arena.
Perhaps WhatsApp’s acquisition could be seen as a move to stay relevant. Spending $19 billion will certainly make large waves in the news, but perhaps there are other reasons.
Maybe Facebook is trying to control a piece of web communication that it hasn’t been able to in the past. Or maybe the Facebook research and development department is expecting rapid growth from WhatsApp, not evident to anyone else.
I don’t think the move has anything to do with self-preservation, at least in the long term. I acknowledge that we’re in an age where social media conglomerates can become as big as well-known media conglomerates. Facebook is trying to duke it out with Google and any other takers who want web supremacy. Controlling an app that enables more than 450 million people to communicate is just another piece in the puzzle.
What do you think? Did we just witness a calculated move in the battle to control web communication, or is this an expensive attempt at staying relevant? Comment below. After that, be sure to “like” Innovative PR on Facebook and follow it on Twitter.