Why Facebook Acquired WhatsApp

Facebook saw WhatsApp not just as a growing adversary but as a possible killer of the social media app. As per Porter’s 5 forces analysis, WhatsApp was becoming a threat of substitutes for the company. WhatsApp was growing steadily in its percentage of market reach beating out popular mobile apps. So, Facebook saw both vulnerability and opportunity in WhatsApp and acquired it for a whopping $19B in 2014. By doing so, the company also kept WhatsApp out of the hands of other tech rivals. In early March 2017, the company formally went public underneath the buying and selling image SNAP, and raised nearly $30 billion in market capitalization on the first day of trading.

In shopping for Beluga, Facebook acquired the know-how that finally turned the social media firm’s highly profitable Messenger platform. In the method, Facebook once more expanded its choices and eradicated a possible rival. Facebook, Inc. is a social networking company that has acquired 82 other companies, including WhatsApp.

why facebook bought whatsapp

You will be able to simply login with your Facebook account and give the website permission to send you a message on WhatsApp. Sign up for our newsletter for the latest tech news and scoops — delivered daily to your inbox. In identifying mobile usage trends, Onavo became a crucial tool for Facebook to survey its competition. But that all changed in October 2013, when Facebook purchased Onavo for $100 million.

While Instagram isn’t currently promoting ads on IGTV, it’s going to doubtless turn out to be an important new revenue stream over time and a chance to sell advertisements at extra premium, TV-like costs. And lastly, in April 2014, Facebook added Moves, the health tracking utility and its ProtoGeo Oy growth firm, to a protracted listing of other app acquisitions that includes WhatsApp and Instagram. Also, initially, Facebook said it’s not excited about incorporating the fitness know-how into its personal providers.

Does Facebook own WhatsApp?

Throughout much of its historical past, WhatsApp has allowed customers to send messages and make calls directly to different customers for no cost, no matter location. Users also can ship photographs, videos, and paperwork over the platform. Facebook bought Instagram in 2012 for $1bn (£760m), and WhatsApp in 2014 for $19bn. The App Annie ranking highlights just how much power and control Facebook CEO Mark Zuckerberg has. The four main apps that Zuckerberg oversees boast more than a billion users each. By February 2013, Snapchat confirmed a $thirteen.5 million Series A funding round led by Benchmark Capital, which valued the corporate at between $60 million and $70 million.

“Mobile has been at the heart of major changes in consumer behaviour this decade,” wrote Adithya Venkatraman, a markets insights manager at App Annie, in a blog. Eight of the top 10 apps are owned by US corporations, while two are owned by Chinese firms. Outline your company’s marketing https://1investing.in/ strategy in one simple, coherent plan. Monetize refers to the process of turning a non-revenue-generating item into cash. Read about monetization on Facebook, YouTube, TikTok, and Twitter. Facebook’s bid price was astronomical, even for Silicon Valley, with a bid at $16 billion.

Facebook to Acquire WhatsApp

I don’t know how Facebook’s WhatsApp deal will end up looking — and neither, it’s worth noting, do any of the pundits who are pronouncing it brain dead. Based on everything I do know, though, I think the odds are that it will end up looking brilliant. According to reports, Meta is rolling out a system that notifies users when their posts are removed and how. We don’t spam, we will just send you a daily email with the best of our posts. To sum up, WhatsApp will be a great ally for Facebook’s goal to dominate the globe in terms of communication and messaging and it will be exciting to see how it goes.

why facebook bought whatsapp

So far, it has Facebook Home, Instagram, Messenger, and Paper, and Zuckerberg sees WhatsApp and similar buyouts as just one other means of increasing Facebook’s multifaceted attain. At the time of the acquisition, Onavo was an independent company. Although Onavo isn’t considered one of Facebook’s largest acquisitions, Onavo’s know-how could have allowed Facebook to make essential early determinations about different corporations and apps to accumulate. Facebook bought WhatsApp at a time when the smaller firm boasted greater than four hundred million active month-to-month customers, making it a fast-growing potential rival to Facebook’s platform. In February 2013, Reggie Brown sued Evan Spiegel and Bobby Murphy.

Everyone Who Thinks Facebook Is Stupid To Buy WhatsApp For $19 Billion Should Think Again …

Let’s assume WhatsApp grows to, say, 300 employees over the next few years. Meanwhile, if the company’s growth trajectory continues, it could easily be pulling in more than $1 billion a year of revenue in a few years. By acquiring Onavo and turning it into a private tool, the company took away one of the best avenues for understanding mobile trends outside of Facebook’s ecosystem. The social network was then free to track app usage and trends even at very early stages.

Facebook fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook’s expertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner. People use multiple messaging apps to talk to friends free of charge.

  • WhatsApp is 100% social, and you don’t have companies in your phone book.
  • We do this by building services that help people share any type of content with any group of people they want.
  • Perhaps that sounds scary, but it’s not much different from how Gmail works now.
  • When you don’t want to use WhatsApp, you’ll receive a text message.

What is impressive about WhatsApp is its rapidly increasing user growth. WhatsApp is the fastest growing company in terms of users, since it managed to reach 419 million users in just 4 years, while Facebook only had 145 million users at its first 4 years. It is estimated that almost 1 million users join WhatsApp every day, which will soon lead to an even bigger user growth. With a shared mission of enhancing global connectivity via internet services, the merging of forces will likely accelerate growth for both companies. The social community appears to be strictly excited about increasing.

If a potential Facebook killer was on the rise, Facebook could hypothetically spot it before anyone else. According to Bloomberg data, the WhatsApp acquisition is one of the biggest internet deals since Time Warner’s $124 billion merger with AOL in 2001. A defensive acquisition is a strategy why facebook bought whatsapp that consists of a company buying another company as a “defense” against market downturns or possible takeovers. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.

During April’s depositions, Brown testified that he had believed he was an equal companion, and that he had agreed to share costs and earnings. Months later, Spiegel dismissed the lawsuit as an example of opportunists who search out rapidly profitable companies in an try “to also profit from the onerous work of others”. On November 14, 2013, The Wall Street Journal reported that Facebook provided to accumulate Snapchat for $3 billion, however Spiegel declined the money provide.

People use multiple messaging apps to talk to friends free of charge.

WhatsApp’s true selling point is that it doesn’t cost users a dime for first download, the connectivity can work across multiple phones and operating systems, and the product is functionally very easy to use. The system currently hosts approximately 450 million users, well over 33 percent more than either of it’s primary competitors – WeChat and Line. While many in the US don’t use it due to existing free text message packages, the app is wildly popular overseas, especially in India. According to OnDevice Research, WhatsApp is the most popular messaging app for smartphones. WhatsApp is a messenger and calling service out there to customers throughout the world. The platform was launched in 2009 as a low-price various to plain textual content messaging services.

Facebook acquisition of WhatsApp (case study)

By then, the agreed-upon 184 million Facebook shares inflated the final sale price by an additional $1.7 billion. Facebook’s $1 billion acquisition of Instagram, for example, which was then a revenueless firm with thirteen staff, was seen as proof that Mark Zuckerberg was a clueless child who had no enterprise running a major firm. Meanwhile, Facebook is now valued at $a hundred seventy five billion, and Instagram is considered one of the smartest preemptive acquisitions in historical past. Nineteen billion dollars for WhatsApp is a much bolder bet than Instagram, however it, too, may end up trying lots smarter than most individuals think. Acquisitions have been key to rising these companies and Facebook’s revenue in general.

WhatsApp already has a powerful revenue model, and other successful messaging apps are showing the potential for it to add many more. WhatsApp ostensibly charges its users $1 per year after the first year. (“Ostensibly” because I’ve never heard of anyone actually paying this $1). Assuming most current users end up paying the $1/year, that’s a potential revenue stream of several hundred million dollars a year from WhatsApp’s current revenue model alone.