WhatsApp, doc: Facebook just bought a new toy for $19bn

The app's acquisition was apparently sealed over chocolate covered strawberries on valentine's day. How romantic...

by Emma Haslett
Last Updated: 23 Mar 2015

It started, of course, with a Facebook post: 'I'm excited to announce that we've agreed to acquire WhatsApp and that their entire team will be joining us at Facebook,' said Mark Zuckerberg. So the 'entire' team - all 50 of them - are traipsing over to Facebook's office. Is it us, or are companies valued at more if they have fewer employees?

A statement revealed the details: Facebook will pay a whopping $19bn for the app ($4bn cash, $12bn Facebook shares, $3bn stock at a later date), which allows users to send messages over wifi and data connections, thereby bypassing text messaging fees. Because of that, the app is a hit with anyone who uses pre-paid phones, ie teenagers and those in developing economies (on a recent trip to Rwanda, MT was bombarded with WhatsApp requests). Incidentally, those are markets where Facebook's popularity is either waning or is yet to grow. 

You've got to admit, the figures are pretty impressive: Whatsapp is said to have 450 million monthly active users, with 70% returning to it on a daily basis. There had been some talk about monetising it with advertising - but Zuckerberg is reportedly keen to avoid that outcome. So that's a relief. 

In fact, it's win-win for both sides: the Whatsapp founders walk off as billionaires; Facebook absorbs a potential competitor. Lovely.

The deal makes Facebook's $1bn acquisition of Instagram last year look like small change: when that happened, everyone cried 'bubble'. Imagine the posturing happening in boardrooms now...

But Zuckerberg is obviously deadly serious about WhatsApp's potential. Although he said the prospect of a deal was only floated 11 days ago, MT prefers Business Insider's version: that he has been wooing founder Jan Koum since the spring of 2012, with the two going on hikes to talk it over. Koum apparently relented on Valentine's day, interrupting the Zuckerbergs' romantic dinner to deliver the good news. A final deal - which includes a seat on Facebook's board for Koum - was thrashed out over chocolate-covered strawberries. Aaah.

The deal will be particularly delicious for Koum's co-founder, Brian Acton. In August 2009, he posted this tweet: 

Now he'll end up working for Facebook. Funny how things work out, isn't it?

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