WhatsApp with that deal?

by Shane Dillon

WHENEVER you hop onto Dublin Bus or the Luas at the moment, you’ll easily see two apps in widespread use on smartphones – Candy Crush Saga (see below), and WhatsApp.

For those who may be new to smartphones – even today, there are still many who are – WhatsApp is a free (for the first year; minimal charge thereafter) messenger app that uses 3G or Wifi to send free texts and other media contact to anyone using the same app – thus completely bypassing mobile carrier services.

Until very recently, WhatsApp had a comparatively low profile, without any of the social buzz surrounding the likes of Instagram, Snapchat, or Facebook. Speaking of which …

Enter Mark Zuckerberg, Facebook’s founder, who made a pretty astonishing deal in late February to buy WhatsApp for the Dr Evil-ish sum of $19bn (in euro by my calculations, that’s … a lot of money).

“Facebook buys WhatsApp for $19bn” is a headline that’s been widely reported, and which you may have already seen.

However, there’s been a comparative lack of insight into why Facebook paid such an eyebrow-raising figure for an app that doesn’t generate any major revenue at present.

Gazing into The Gazette’s crystal ball, and using the same finely-honed guesstimate skills that tech watchers and financial analysts are using at the moment, I can confidently gues- err, predict that this latest tech acquisition was a tactical move by Facebook.

After all, while Facebook has leapt into the public eye and imagination in recent years, there are certain markets – such as across various Asian countries, for example – where its uptake hasn’t been as rapid, or unchallenged.

In such sectors, WhatsApp (and similar services) have a strong presence, with communications messengers providing a bigger challenge to social media than in our Western markets.

Bearing this in mind, WhatsApp’s acquisition is a way to further bolster the Facebook brand globally, and especially in such comparatively weaker markets.

For now, the $19bn deal – comprising a hefty chunk of money up front, stock shares and further payments down the road – sees Facebook as owner of the hugely-successful messenger service.

With that, it can be presumed to start automatically data-mining all of the data exchanges that WhatsApp users have been sending for a few years.

Armed with this data, Facebook could work on further refining its advertising strategies and algorithms, as well as seeking to further monetise WhatsApp (possibly by introducing tailored advertising to the currently ads-free, streamlined app) while a wild card guess could see WhatsApp integrated into Facebook – all of which add value to the overall Facebook brand.

In the short term, it seems like a crazy figure to have paid out, but in the long run, it could turn out to be a prescient purchase for Facebook.

And, at least it didn’t pay a truly ridiculous price for the company like, say, $20bn …

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