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Google's offer lacked the board seat Facebook gave up

Yesterday we mentioned that Facebook had plunked down a huge amount of cash to buy the WhatsApp messenger service. The purchase cost Facebook a whopping $16 billion in cash and stock.
A new report from Fortune claims that Facebook wasn’t the only major tech firm sniffing around WhatsApp. Google also reportedly made an offer to buy the company for $10 billion.
Google's offer was not only significantly less than the one made by Facebook, but the Google offer also reportedly didn’t come with a seat on the board as Facebook's did.
Many of our readers have commented that they are flabbergasted as to why such a simple app would be worth so much money to Facebook and the reasons are quite simple. The service has 450 million active users and is gaining one million new users each day. Many companies would kill for the information that can be skimmed from those users.
As Facebook CEO Mark Zuckerberg said in a conference call following the announcement, "WhatsApp is the only app we’ve ever seen with higher engagement than Facebook itself."

Source: CNN

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By GotThumbs on 2/20/2014 10:48:52 AM , Rating: 5
I find it very amusing how quickly people seem to freak out about some new app.

I just heard about this App, but still not interested in using it. Apps seem to be like clothing fashion. One week its in...the next week its out.

Of course I come from the period of ICQ, AOL messenger, and AOL Neighborhoods and I didn't even use those that much after the initial curiosity.

IMO, Facebook will go the way of AOL in time. People will grow tired of it and something new will come along and dazzle the adicted "Social media" druggies.

~Best wishes on a great day.

By heffeque on 2/20/2014 11:02:20 AM , Rating: 4
WhatsApp is the primary messaging system moslty in countries where sending SMS isn't "free".

By kmmatney on 2/20/2014 11:49:21 AM , Rating: 2
I'm assuming it uses data, though? I get my phone free from work, but the rest of my family (4 phones) are using Ting, so messaging is fairly cheap - for our usage about $5/mo for all 4 phones. I guess it depends on how much data WhatsApp uses to see if it is worth it - it must be using data even when not in use to check on things.

By althaz on 2/20/2014 5:00:30 PM , Rating: 2
Whats app messages at typical data prices work out to cost the end user about one cent per 12,500 messages.

By Jeremy87 on 2/20/2014 8:51:56 PM , Rating: 2
My plan is 3€/mo which includes a limited number of free SMS, but unlimited (albeit slow) internet. Why would I not use WhatsApp with my friends who also use it?

By Motoman on 2/20/2014 12:20:09 PM , Rating: 2
Yeah, and it's just like Kik and probably a bunch of other exactly-the-same apps.

None of which are worth $16B.

By Jeremy87 on 2/20/2014 8:52:54 PM , Rating: 2
The app isn't worth 16B. The huge userbase is.

By Motoman on 2/21/2014 12:35:52 PM , Rating: 2
Not after they jump ship and go to Kik or Skype or any other me-too app.

By amanojaku on 2/20/2014 1:50:30 PM , Rating: 2
I think his point is that Facebook overpaid for something that may not be relevant in a few years. WhatsApp could become the next ICQ. Facebook should have just saved that $16B, since it is also in danger of becoming irrelevant. Not for the next 5-10 years, but the decline has already started. Monthly growth has been declining, and it's not entirely due to saturation. Facebook is mostly an American phenomenon. It has little traction outside of the US except for a few countries. Even more damning is the exodus of young visitors for alternatives like Tumblr. Facebook's users are getting older, and older people tend to use social media less.

By lagomorpha on 2/20/2014 1:58:14 PM , Rating: 2
Facebook is mostly an American phenomenon. It has little traction outside of the US except for a few countries.

Which is probably the motivation for the purchase. Within the next couple months if you're a WhatsApp user but not a Facebook user expect a message like the following:

Congratulations *user* WhatsApp is dropping the $1/year fee, to continue WhatsApp service simply log on to your Facebook account. Don't have a Facebook account? Create one now!

It's going to be worse than when Google started forcing gmail/youtube accounts to merge or when Microsoft tried to start changing Skype accounts into Microsoft accounts.

By alpha754293 on 2/21/2014 9:48:12 AM , Rating: 2
That's an interesting point about the consolidation of services as the tech companies start merging. So they're on THAT phase of the cycle now, until at some point in the future, they're going to get a little too big for people to be comfortable with (or the management becomes lax as they're just WATCHING profits happen, almost as though magically and spontaneously). And then they will start withering and falling and dying, then they get broken back up in bankruptcy court, and then whole cycle starts all over again. was pretty annoying when Google forced Youtube into Google accounts.

By ven1ger on 2/20/2014 2:15:40 PM , Rating: 2
Maybe that's why FB found value in the app, because of its users so seem to be predominantly outside of the US. As you stated, FB is mostly US, this will bring in many users to FB from outside the US, especially when they will require a FB account to use the app.

By amanojaku on 2/20/2014 3:26:49 PM , Rating: 2
That only proves the point that the purchase is silly. You know FB will integrate WhatsApp into its site. The reason WhatsApp became popular, outside of offering SMS over data, was the privacy: people can't browse your stuff on WhatsApp like they can on FB. Give it a year or two; I'm sure FB will fix that little problem. Plus, FB may be purchasing users it already has.

The only upside to this is that WhatsApp will be the first product FB owns that generates revenue from users instead of advertising. But at a dollar per user per year, the $400M earned annually will take close to 50 years to pay off the $19B (it's $19B, not $16B).

By Shlong on 2/20/2014 4:29:48 PM , Rating: 2
Not really, Instagram hasn't changed all that much since Facebook bought it. I've seen about 2 ads in the past 6 months (open the app multiple times a day) but that's about it.

By inperfectdarkness on 2/20/2014 3:24:44 PM , Rating: 4
I used trillian for a LONG time. I'm only using Skype. I have no desire to migrate. I stopped playing that game when everyone left Myspace and went to FB. I stopped using social networking altogether.

Am I missing anything? Certainly. Am I missing anything I don't want to be missing? Not in a billion years.

By KFZ on 2/21/2014 12:26:36 PM , Rating: 2
Your privacy.

Skype went to Microsoft, Yahoo acquired Tumblr, and this ethics-challenged, global user sell-out land whale of a disgusting company swallowing up Instagram and this latest app should rightfully annoy the heck out of respective users.

Skype, Tumblr, Instagram, Whatsapp... they're great from what I know, but think about them as being used as alternatives to MS, Yahoo and FB services. If I was a big user of this messaging service I'd be incredibly pissed and searching for something new. I explicitly avoid companies that are really a front for advertising and data-mining.

By ResStellarum on 2/21/2014 9:56:33 AM , Rating: 2
IMO, Facebook will go the way of AOL in time. People will grow tired of it and something new will come along and dazzle the adicted "Social media" druggies.

People are already tired of Facebook. The important target groups (16-30) have long since abandoned it. Which is why Zuck is scrambling to buy up everything they're abandoning it for, namely Instagram, WhatsApp etc.

The only people left on NSAbook now are the older generation who signed up to keep in touch with their kids. And they don't use it much. So Zuck's left with 1 billion stagnant accounts, and a couple of hundred million fake accounts being run from people in asia. Facebook's finished. It's desperately buying up all the competition to try and stay relevant. It won't work because everyone hates FB.

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