Facebook’s Acquisition of WhatsApp the Biggest Internet Deal Since 2001

What started out as a casual meeting over coffee in the spring of 2012 has become the biggest internet deal since Time Warner and AOL’s $124 billion merger 13 years ago. Mobile messaging start-up WhatsApp, which has witnessed a phenomenal take-up since its inception in 2009, has just been bought by – who else – Facebook, the world’s biggest social network. While more details about the deal are yet to be confirmed, what is absolutely true is that Zuckerberg forked up a whopping $19 billion in cash and stock to acquire what it clearly considered its biggest threat in the mobile messaging space. The successful acquisition follows a failed one – that of ephemeral messaging service Snapchat – which turned down a reported $3 billion offer from Facebook.

It looks as if Zuckerberg had been planning the move quite some time ago. He was the first to reach out to WhatsApp founder Jan Koum over coffee at a Los Altos bakery. After subsequent hiking trips and dinners, Zuckerberg is said to have gone for the kill, suggesting that the two companies merge. Koum didn’t take long to confirm his interest, and co-founder Brian Acton also came on board enthusiastically.

The deal pushes WhatsApp’s market value to more than half of micro-blogging site (and competitor) Twitter’s, which is presently valued at $31.5 billion. WhatsApp is clearly a consumer favorite, with over 450 million members, while competitor apps from Snapchat, Twitter and Kik Interactive follow close behind. It is free for the first year and costs 99 cents after that, which is one of its biggest advantages. That it has kept ads out also differentiates it from other services of its ilk, and is in contradiction to Facebook’s growing focus on advertising revenue on mobile devices. WhatsApp has maintained that it will not compromise on its core principles. It will also remain autonomous, so the product and vision is expected to remain the same, which many will agree, is a good thing.

By WhatsApp Inc. (http://media.whatsapp.com/) [Public domain], via Wikimedia Commons