wordpress blog stats
Connect with us

Hi, what are you looking for?

Facebook Acquires WhatsApp For $19 Billion; Has 450M Active Users

whatsapp_facebook

Messaging company WhatsApp has been acquired by social network Facebook for $4 billion in cash and approximately $12 billion worth of Facebook shares. The agreement also provides for an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest over four years subsequent to closing. In case the acquisition does not go through due to regulatory approvals, Facebook will pay WhatsApp $1 billion in cash and issue WhatsApp Facebook’s Class A common stock shares worth to $1 billion.

Stats: WhatsApp had 450 million active users at the time of acquisition, with 320 million of them using the service on a daily basis. It had announced in December that it has 30 million active users in India and close to a million users are installing the app every day. It also processes 50 billion messages, 600 million photos, 200 million voice messages, 100 million video messages on a daily basis, with all these factors growing at a rate of 100% year-on-year. According to Sequoia Capital, Whatsapp adds over a million users a day, has a daily active user base of 72%, and at 32 engineers, one Whatsapp developer supports 14 million users. The company has zero marketing spends, and all marketing has been done by its partners (typically, telecom operators)   

India Connection: Neeraj Arora (twitter, LinkedIn), Heads business for Whatsapp. He was previously an M&A lead for Google, initially working in the M&A team at Google India, before moving to Mountain View as Principal, Corporate Development. Prior to joining Google, he was Chief Manager at Times Internet Limited. Arora is an IIT Delhi graduate, and an MBA from ISB (Hyderabad).

What’s with the valuation

There must have been two reasons that inspired Facebook to give WhatsApp such a high valuation. Snapchat saying no and the sheer size of numbers WhatsApp has to offer. Not many companies around the world have a product that is used so frequently by so many people. It also offers Facebook a leg up in several emerging markets and Europe, where WhatsApp is very popular.

Monetisation: Mark Zuckerberg said that Facebook will let WhatsApp operate independently and that it will not use advertising in the app to monetise it. Importantly, Whatsapp doesn’t collect demographic information like name, gender, address,  or age, but it does need a mobile number for registration. Facebook has this demographic data and the phone number, so it can possibly connect Whatsapp users with their Facebook login. Connecting the two might help Facebook identify who users interact with most on the mobile platform, and it is more likely to use Whatsapp to improve the personalization and relevance of Facebook, than for delivering advertising.

Big win for SequoiaReuters points out that the sale is a boon to Sequoia Capital, which invested $8 million along at a valuation of $78.36 million in 2011 and it was the only venture capital WhatsApp ever raised. TechCrunch speculated that if Sequoia owns 10% of WhatsApp, it will see a return of $1.6 billion, or 200x on its investment.

New trend?

This move, comes days after internet telephony and messaging company Viber, which has 15 million registered users in India and 300 million registered users internationally, was acquired by Japanese membership-based Internet services company Rakuten for $900 million. Rakuten had said in its earnings presentation that Viber has 105 million monthly active users globally and that the deal will be closed by March. Rakuten plans to integrate Viber’s backend into its other services.

Competition:  In India WhatsApp competes against services such as Line, WeChat, Hike, Rocketalk, Mig33, Imsy, Gupshup Messenger, JaxtrSMS, ChatON (Samsung), Pinch (Affle), among others, and maybe even Blackberry’s BBM service. Services such as LINE and WeChat have taken an ecosystem approach and have been adding services on top of the messaging service to monetise.

Telco partnerships in India: Whatsapp has partnerships with Tata Docomo and Reliance Communications in India. On Idea Cellular, where it doesn’t have an official partnership, the company has 6 million active users.

Did you know?

The app may not have existed the way it did, if Facebook had not turned down WhatsApp co-founder Brian Acton when he applied for a job with the social network in 2009.

and Twitter too.

Wait a second, what did Facebook actually buy?

 

You May Also Like

News

The Indian Newspaper Society has asked Google to compensate Indian newspapers “comprehensively” for their content and to share its advertising revenue, reported the Indian...

News

Digital news publishers will now have to notify the government of their operations, set up self-regulatory organisations and apply a complaints redressal mechanism, as...

News

Facebook is indefinitely banning the Myanmar military, military-controlled state and media entities, and even ads from military-linked commercial entities, from Facebook and Instagram. Earlier this...

News

The Indian government has issued the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. The Rules propose significant changes in how internet...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ