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back to article Facebook gobbles WhatsApp for SIXTEEN BILLION DOLLARS

Facebook has announced that it will acquire mobile messaging service WhatsApp in a deal valued at $16bn. The merger was revealed in a filing with the US Securities and Exchange Commission published on Wednesday. According to the paperwork, WhatsApp will become a wholly owned subsidiary of Facebook in exchange for $4bn in cash, …

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Anonymous Coward

I may sound stupid but..

What's the benefit of owning WhatsApp from Facebook's perspective? Targeted Ads etc?

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Re: I may sound stupid but..

some companies buy others just for the userbase. in this case I think they want to drive more users to the facebook messaging service so they can gather more data on their users to sell to advertisers.

I don't believe the "WhatsApp will remain autonomous and operate independently," bit at all. It will be integrated into the main Facebook platform. Operating independently doesn't make any sense. The only way Facebook can justify the cost is by merging the platforms.

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Re: I may sound stupid but..

If it's the case of buying for users then there is perhaps one odd thing FB will find out. Most people I know here in SoCal have dropped WhatsApp for other services like Line, Viber and WeChat. The last of the three seems most popular with folks with ties to mainland China as it's quite popular there.

Personally I can't wait until the stories of sales calls start.

"Hello"

"Hi, are you having trouble inserting suppositories? Try our magic finger cots and say goodbye to scrapes caused by fingernails forever."

"No, I was complaining about FaceBook getting up my arse on WhatsApp."

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Re: I may sound stupid but..

You're spot on about WhatsApp 'not being changed'. I have yet to see a single merger or acquisition where significant, previously unknown/unrecognized issues don't crop up and require substantial modifications to bring the purchased entity inline with the rest of the organization. There is no way to avoid it.

Besides, if you pay billions of dollars for something, and don't change anything, just go the fuck home.

You have completely missed the point of years and years of 110 hour weeks. All the money you've acquired is absolutely worthless if you aren't using it to shape your world.

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Re: I may sound stupid but..

It's a $16b assassin to kill the most dangerous competitor in town (er.. the world). If the competitor could be turned into a zombie and of some use, that is even better. Who to kill next? BBM.. WeChat?

I feel strangled :(

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Re: I may sound stupid but..

They are buying that data mining rights from now until "forever" on all messages. If FB was a NSA front company, it probably isn't but if it was, this would be a cheap deal, first Instagram for photos of everyone on the planet now tapping into all the messages. Think of how focused adverts could be knowing everything you ever said to everyone throughout your entire life. If it is free or very cheap, then you are the product.

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Re: I may sound stupid but..

"What's the benefit of owning WhatsApp from Facebook's perspective?"

It's a pretty basic characteristic of market capitalism that the best use of capital is often the buying up and subsequent elimination of competitors (ask any mafia boss).

The idea of a free market is that you get two teams and give both an incentive to find ways to prevent the market from operating freely. A very efficient way to do that is to reduce your "team" to just one member. So we get cartels, trade unions, and monopolies on the selling side and co-ops on the buying side all trying to find a form of collectivism which stacks the market in their favour. Inevitably, it all collapses and the government has to step in to prevent mass unemployment and/or starvation.

So we have the cycle of boom and bust that we're all familiar with and which every government of every party says it has a solution for.

The real solution is.... only kidding, there is no solution. Although a government that stops pretending that there is a solution and instead just pays attention would help.

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LDS
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Antitrust laws were introduced to avoid distortions of the free market...

... but US courts have become very very afraid of enforcing them because someone said them those laws could damage the "US economy" - meaning "those laws could damage the earnings of those able to distort the free market".

But this doesn't look the case of Facebook needing to kill a competitor - it's just Facebook has really no idea how to sustain itself in the long run, and thereby is buying more companies that don't have an idea how to sustaint themselves in the long run.

The best business today is setup a company based on a single product but that could appeal to many users for a while - then sell it to Facebook for many $$$bn, and then buy your own tropical island and open a bottle of champagne and drink it cheering the Facebook people who made you rich... and wait for them to fall - meanwhile remember to sell all of their stocks, in a couple of years their value will be $0.00

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Anonymous Coward

Re: I may sound stupid but..

So that's about eleven thousand milllion pounds....For a chat client. What a bargain...

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Anonymous Coward

Re: I may sound stupid but..

I'd imagine there was a huge amount of overlap in the user base - realistically how many people who have WhatsApp will not have Facebook or vice versa?

So they pay $16bn and charge $1 a year to people who choose to pay (probably relatively few) - lets assume you want to repay the money in 10 years then you would need $1.6bn a year profit. If 1.6bn people (about 1 in 4 of all the people on the Earth) paid they would make $1.6bn in revenue (not profit).

And how many people actually pay - on a quick poll of the office the people who have used WhatsApp did not pay / did not even know you could pay. So guess they have a way to go...

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Gav

"Autonomous", yeah right.

If you don't think that the harvested data from WhatsApp isn't going to get cross indexed to the harvested data from Facebook, then you are living in a fairy land.

Once that's done, everything in WhatsApp will be about leveraging that information and connection. That's guaranteed.

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TRT
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Re: I may sound stupid but..

" realistically how many people who have WhatsApp will not have Facebook or vice versa?"

Err... there's one here. I won't have any truck with FB at all. I have What's App? as it's kind of handy for sending pictures (my MMS service is next to useless and costs 40p a go).

So yet another thing that's going to be ruined.

*puts it into the locked drawer with Flickr, Blogger, etc*

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Re: I may sound stupid but.. @Robert Long 1

No. Eliminating competition is not a characteristic of any sort of capitalism (there's no such thing as free market capitalism, but that's another issue :) Eliminating competition is, on fact, the exact opposite of capitalism as it reduces, and caps, revenue and increases your operating costs many times over.

Destroying a competitor isn't a difficult thing, it's just counterproductive. The goal is to manage your competitors into a position where they are forced to take the market segments you don't want. Every business has categories of customers they don't want and if you have no place to dump them you have to service them if for no other reason than keeping some upstart from getting in through means you don't control. Better the enemy you know and all that.

Being able to define customer/market segments is the #1 benefit of market dominance. It's your party so you take what you want and give the rest to whoever you want. Ideally you'll have two, maybe three entities and you force them to fight each other while you get back to making money. A good IT example is AMD. Intel reaps simply stupendous wealth by virtue of AMD merely existing.

That's in no way implying AMD, or an AMD equivalent in another market, has inferior products. It's simply that the dominant player has structured the market to best suit their own needs. It is a sound use of company resources to make absolutely certain the top 2-3 companies under you stay in business.

If they get uppity and start poking around in your space you just bring in another entity with offerings/models that directly threaten the uppity company but pose no threat to you (hello ARM). You can do that for ages and ages. Nobody can stop you because if they don't take what you're allowing them to have the company right behind will do it. But that rarely happens. Nobody can go toe-to-toe with a giant globocorp if you don't have significant revenue so they've got to take it. So they're locked down and everybody involved gets rich. There's room for everyone, just don't come in my house being pushy.

There are many, many other reasons as well, but without industry validation through the existence of a competitive marketplace your future is limited and isn't scalable. If you ever want to see how empty a room full of people can be, go to an business finance event (like a VC round table) and say you want to completely dominate your market. If somebody doesn't shoot you with a taser they'll chain you to a radiator while they try to determine which mental hospital you've escaped from. Everyone there is there to make money, not to see how high banks will really go on interest rates for materials credit lines.

Unless you are in an industry where prices are capped by the government being the only player in any given space is quite possibly the worst position you could possibly be in.

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Re: I may sound stupid but.. @Robert Long 1

"Destroying a competitor isn't a difficult thing, it's just counterproductive. The goal is to manage your competitors into a position where they are forced to take the market segments you don't want."

Which is the same thing as having a monopoly in whatever market you're actually interested in. I don't really see what you're getting at unless it's the idea that no company can hope to dominate every market for every service or type of good. But I don't think anyone believed that anyway.

As to the drunken lunatics called "VCs", in my experience ALL they want to hear about is how quickly you can get to market and eliminate/block the competition. But that's hardly surprising since none of them know what they're doing (or they'd only invest in good ideas, right?) and think the best way to make a quick buck is to become the "only option" in whatever area you're pitching to them about.

"There are many, many other reasons as well, but without industry validation through the existence of a competitive marketplace your future is limited and isn't scalable."

This is idealistic. From the point of view of hindsight it's true that monopolies are almost never as productive as a healthy market (which is a rare thing in itself) but from the point of view of the people in that monopoly at the time it's very likely to be easy money and when they retire to their private Caribbean island it won't bother them if the company collapses ten years later. Industry validation never paid a penny into Bill Gate's bank account - by the time there were serious competitors in the OS sector he was already the richest man in the world.

"Unless you are in an industry where prices are capped by the government being the only player in any given space is quite possibly the worst position you could possibly be in."

Yeah, and winning the lottery doesn't automatically make you happy. But it'll do in the meantime.

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Oh great

There goes the neighborhood. There's a good chance WhatsApp will be either shuttered or forcibly migrated to use FaceBook credentials in the near future. And that will be the moment some other I'm solution will take over. Maybe BBM? At least that one can shield you from giving away your phone number, which is required by WhatsApp.

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Anonymous Coward

Re: Oh great

>At least that one can shield you from giving away your phone number, which is required by WhatsApp.

WhatsApp is simply understood as a cross-platform SMS replacement (used to communicate with friends in the real world who already have your telephone number) and the annual fee (after the first free eighteen months) is less than the cost of sending two MMS messages. For the same reason, it doesn't have a desktop client.

There are other ways to communicate with people you don't really know.

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LDS
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Re: Oh great

The telephone number is a great, powerful unique identifier.... that's why WhatsApp & C. uses that instead of a simple account. And through messages they're able to build an accurate graph of all relationship - that database alone could be very interesting for Facebook. Of course the NSA has already its copy...

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Re: Oh great

Another app I'll just have to live without. Like Instagram and (nearly) SnapChat.

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Re: Oh great

Yep. Lot of apps deleted recently - Angry Birds, Google Maps and now WhatsApp. Doesn't matter much, nearly all my IM is iMessage now anyway.

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Stop

Hmmm...

I wonder if I can get a refund for Whatsapp now then. Facebook does not, in my mind, lend itself to good, stable management of inter-device communication. There's a reason why people chose Whatsapp over Facebook and it's insidious attempt at a mobile messenger in the first place.

I am not pleased by this.

Back to email?

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Thumb Down

Re: Hmmm...

In the countries where WhatsApp is popular, the paid apps are not bought (for less reach to the payment methods). So, I was already wondering how many of my friends would retain WhatsApp as the year end was near for them. I had always anticipated some dramatic event (suddent closure of the service or sell out), when the largest chunk of it users'd reach the first payment deadline.

So, here we are. And I am on $1bn bet that WhatsApp will be made free. After all it has the richest daddy in the world now :)

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Re: Hmmm...

No need to back to email. Wechat is the way to go! Much better client than whatsapp anyway!

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LDS
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Re: Hmmm...

Especially if you preder the Chineses have your data, and not only the NSA...

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Coat

Re: Hmmm...

Makes! Yahoo! Look! Better! And! Better! Every! Day! !!!

Just Kidding...

(gets me coat, runs out the door......).....

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Windows

Seems like a LOT of money for such a small company

I have a WhatsApp account, but my use and the use of others i know with accounts is pretty sparing. Then, perhaps I am not in their demographic, being a middle-aged guy who doesn't mind sms.

I'd think SnapChat would be sexier.

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Def
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WTF?

Am I the only person to think these evaluations and amounts of money are absurd?

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No, you're not. I agree. The $16 billion price is higher, by 15%, than the market cap of NetApp. That company reported respectable, not inspiring, profits on flat revenues recently. Revenues that are a full order of magnitude larger than those of WhatsApp.

Though I suppose if I understood what value things or ideas actually have, I'd be making something to sell for ludicrous sums of money instead of making comments in disbelief on the internet.

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Windows

Welcome to the current bubble. Which will burst, taking your pension scheme with it.

It's like buying a few Gucci bags while everyone still thinks you actually have a lots a money.

While are you are really just a bum borrowing fine clothes.

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Anonymous Coward

@Def

"Am I the only person to think these evaluations and amounts of money are absurd?"

I don't think it's absurd. I think it's certifiably, pathologically, just fucking insane.

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Yes. The valuation is stupid. I'm not sure if you were in IT at the time, but right before all the underwear gnomes downed tools and got into exotic derivatives and debt transfers, things were proportionate to what we've seen the last 18 months. Sure, the numbers were smaller, but the distance between them was the same waytoofuckingfar as today.

We learned from last time though. Fuck you Webvan, you won't catch us with millions of dollars in completely depreciated, highly customized, physical assets this time! The paradigms have shifted, the target market has matured and now we've got millions of dollars in completely deprecated, highly customized, intangible assets!

The VC group I work with seriously considered establishing an IP holding company (we really did) with the sole intention of 'clogging the mill' on the IP industry. It's an agricultural tactic where you pressure the infrastructure of an industry so much that any value gained through getting to market in a timely manner is lost which allows you to buy it all and remove your pressures and reap the benefits from filling the inventory hole left by the market being stalled.

But that sounded complicated, so I developed a cunning plan that was much easier and perfect for interns. So the entire group put all their patents, and those of all of our wholly owned subsidiaries, into a warehouse we bought a few years ago and never used and I'm going to make the intern have an 'accident' that results in the building, all our patents and the intern being consumed by fire. Obviously, all those things are insured so we'll make billions on the lost patents alone!

We believe our new model will become the standard. Especially after our patent for 'Realizing Liquidity By Offsetting Inventory Losses to 3rd Parties' is granted.

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Anonymous Coward

"these evaluations and amounts of money..."

"Am I the only person to think these evaluations and amounts of money are absurd?"

They are not, it's Free Market in operation.

Wait...

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Facebook messenger must be going well then?

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My friend posted on facebook the other day that he had just noticed it brought up a map of where a user was when then sent a message via the Facebook phone client and he didn't like it... Personally, I've never entered my credentials into the (not deletable without rooting) FB client on my phone, because it has more permissions than it needs (and because there was a story about it rewriting email addresses in your phone's address book with @FaceBook.com replacements)

Facebook has not earned my trust. Just the opposite, in fact.

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Anonymous Coward

"My friend posted on facebook the other day that he had just noticed it brought up a map of where a user was when then sent a message via the Facebook phone client and he didn't like it"

Yep - most people don't know that - you can track exactly where your partner, kids, etc are just by getting them to reply to a FB message ;-)

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The ridiculous values attached to Nest and WhatsApp

Makes me think we're due for another bubble burst.

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Shame...

I rather liked WhatsApp. Pretty much everybody I know with a smart phone uses it. However, I know people that are wanting to abandon Facebook (me included).

If Facebook even so much as think about taking WhatsApp the direction of Facebook accounts needed, then I'm ditching it and suggesting to everybody I know they use BBM instead.

This might just be what Blackberry ordered....

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Anonymous Coward

Re: Shame...

"I rather liked WhatsApp."

It's OK, but there is no way i am paying for a messaging client while Skype is free.

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Anonymous Coward

Good

This gets the entire Dot Bomb Bubble 2.0 under one roof, so when it collapses under it's own weight, it takes out everything beneath it. Wish we could get Twitter under that canopy when it falls.

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Re: Good

Don't worry, when one goes all the rest will quickly follow, regardless of whether they're owned by the same company. It doesn't take much to spook the financial traders*.

*but they'll be back, and in greater numbers...

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Anonymous Coward

Oh sure, they're autonomous.

But Facebook will now casually tap into all the data transmitted through WhatsApp's servers, establish a link with your Facebook profile, do all sorts of big data analysis, improve it's advertising margins, sell data to NSA while trampling over everyone's privacy.

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@AC

"Oh sure, they're autonomous"

For now.

With these kind of take overs such situations usually don't last very long.

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Facebook stock trending downward after this Whatsapp purchase news? I'm not paying any "nominal fee" for a chat service that I've been using for free, any more than I'd pay Facebook to promote my posts.

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Anonymous Coward

And the WhatsApp desertion begins....

now!

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Paris Hilton

What now for the Spammers ?

for Months i have been getting Spam emails telling me i have a message left for me on Whatsapp

never had an account there and due to the volume of spam messages i get......

I WILL NEVER HAVE AN ACCOUNT THERE

these so called messages are 5 to 8 sec long ( so the email says)

Does this now mean that these spam messages will tell me as well as holding an unsolicited message on a non existing account that i also have messages on my non existing face/fu*kbook account.

I Suspect Whatsapp payed the Spammers to try and drive traffic to their site to boost their value so as to Rodger face/fu*kbook for a higher sale price

Paris for the shafting snigger

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Holmes

Re: What now for the Spammers ?

Mostly just a "Me, too" message about spam from this company.

I would not be at all surprised to discover that most of the claimed users are just email addresses from spammer CDs. If so and Facebook doesn't know it, then the due diligence is about to explode in their face. On the other hand, if so and Facebook does know it, then they are suffering from delusions of convertibility, even if the company does have functional software. Much of my obvious spam already has "Facebook" written on it, and I hate all of it already. They are NOT going to convert me or get me to accept another intrusion into my privacy and limited attention.

The motto of Facebook should be "Wholesale "friendship", but FAKE", to be compared with the motto of "All your attentions are is belongs to the google." (The link is BeenVerified, another spam operation that is probably being driven by addresses leaked from the Google Play. Their scam is some kind of LinkedIn scam.)

I'd kill my Facebook account, but I'm trying to be polite to some actual friends of the old kind. However, their lack of concern about their privacy is something of a strain on our relationship. Or perhaps I should just call it naivety of the non-charming sort?

As previously noted, I still think that most businesspeople are fine and upstanding folks. Unfortunately they have no effect on the actual rules of the game, which are written by the most cheaply bribed professional politicians working for the greediest and least ethical businessmen.

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Coat

Wot no BEEELION?

Guess you guys were too shocked by the numbers to remember to use it?

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Maybe 15.55bln too much

Just thinking out loud. I'd never pay for WhatsApp ever even though I recall they want 99c a year. I guess I'm included in that 450 million. Not only that but I already use Facebook and don't see WhatsApp as a replacement at all. In fact of all the communication apps I use it is the least featured and pretty naff. No one even uses it the side of the world I am on since there are by far better apps this side of the planet that make WhatsApp look like a beta.

So even if you got 99c from half the customer base who already use WhatsApp and Facebook anyway what the hell is being achieved here?

That values that half of the WhatsApp customer base at about 60 dollars each, or likely more than their entire life left at that price of 99c. Will you be using whatsapp when you are 70 80 or 90?

Someone is fucking stupid at Facebook.

That's all I can say. Sell your Facebook stock now since if this is the calibre of decision making in that organisation your investment is proper being pissed up the wall.

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Re: Maybe 15.55bln too much

450m users @ $1 pa less 30% appstore topslice is $315 revenue pa. At that rate it will be 50 years before Zuck sees a ROI. So it must be about more than the revenue stream?

Is text messaging so expensive in the rest of the world? A quick look on T-Mobile (first to load on my browser), £12 per month gets you unlimited texts. So what is the point of WhatsApp?

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FAIL

Re: Maybe 15.55bln too much

Is text messaging so expensive in the rest of the world? A quick look on T-Mobile (first to load on my browser), £12 per month gets you unlimited texts. So what is the point of WhatsApp?

Well WhatsApp is 99p per year so compared to £144 a year, its cheap..... sorry I don't get your point here??? Add to that picture messaging for free as well???

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Re: Maybe 15.55bln too much

Let me see. In China Whatsapp is not even downloadable and the weixin app everyone uses here is so so so much better than WhatsApp.

But let me think about that: yep, it's a messaging app, with video, text, icons, photos, find people, and social media. It's so simple it makes me no longer use facebook or even want to use it (not least because its banned here but well, by comparison this app is so simple and effortless).

So there it is: your messaging app out here works rather better than Facebook, and Facebook is now looking like bloatware to me. In Japan they use Lime, and Korea uses Kakaotalk, again with the social element that is effortless. So these little messaging apps have messaging and social networking built into them and no bloat. Facebooks redesign should not be to have messaging built into Facebook, but social media built onto messaging.

So that is what Facebook is afraid of. Trouble is, paying for the same customer base as they already have is kind of stupid. Much better investment to have bought up the asian apps customers who arent using facebook - and then "bring them home".

Silly zuckers if you ask me.

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