Facebook is buying mobile messaging service WhatsApp for $19 billion. Why?

Facebook will buy the mobile messaging service WhatsApp for $19 billion dollars in cash and stock. Yep, that's 19 buh-buh-billion with a "b." The company launched in 2009, founded by former Yahoo employees Brian Acton and Jan Koum.

I first used WhatsApp in Central America a year ago, where Guatemalan friends turned me on to it. And let me tell you, *everyone* there uses it.

Why is it so huge there, but largely unheard of here in the USA? In many Latin American countries, phone service providers charge extraordinarily high fees for SMS and MMS messages, relative to the average income in those countries. WhatsApp allows users to send short text, photo, and video messages without a per-message fee, so they can stay always-connected with a chosen group of friends, family members, or co-workers on the cheap. Few people I interacted with there in 2013 uses SMS regularly. Most, regardless of age or economic class, migrated their text and image based communications to WhatsApp. When I asked why, SMS ripoff pricing was often cited.

Another reason for WhatsApp's dominance in the developing world: mobile instant messaging apps aren't convenient in areas where cellular internet coverage is limited, spotty, and costly. WhatsApp doesn't require that you remain connected to data to maintain a single, linear communication session, as mobile IM generally does.

The context for all of this, as a friend from Peru–whose pals all use WhatsApp–just mentioned: the telecoms industry in Latin America is heavily monopolized. This is absolutely the case in Guatemala, where I first saw how thoroughly the app had permeated popular communications culture.

And just as with Facebook's own growth history, once a critical mass of your friends start using a given service, it's exponentially more useful than any other similar service. There may be better versions of the kind of app WhatsApp is. And I certainly hope there are more secure ones, or that there will be. But the social momentum in some parts of the world toward WhatsApp as a primary mobile communications platform makes that, for now, irrelevant. If WhatsApp is where everyone you know is, that's where you go.

As I understand it, the areas where WhatsApp is growing fastest are regions of the world where these are big issues, Central America being one of many. Areas where most people don't sit in front of computers all day. These are not necessarily areas where Facebook is growing, or ever will. I think that's part of why Facebook paid so much for WhatsApp. Go where the potential growth is.

The service has been plagued by serious security and privacy issues, but that hasn't scared off its more than 450 million users around the world.

Facebook founder/CEO Mark Zuckerberg says WhatsApp is growing by about a million users a day.

"WhatsApp will complement our existing chat and messaging services to provide new tools for our community," he said (via, of course, Facebook). "Since WhatsApp and (Facebook) Messenger serve such different and important users, we will continue investing in both."

Snip:

WhatsApp will continue to operate independently within Facebook. The product roadmap will remain unchanged and the team is going to stay in Mountain View. Over the next few years, we're going to work hard to help WhatsApp grow and connect the whole world. We also expect that WhatsApp will add to our efforts forInternet.org, our partnership to make basic internet services affordable for everyone.

Man, though. $19 billion. Just look at this: five years ago, WhatsApp's co-founder was a former Yahoo engineer who couldn't get hired at Facebook, and tweeted about what a bummer the rejection was.

A few years later in 2012, WhatsApp's founders wrote in a blog post titled "Why We Don't Sell Ads,"

Remember, when advertising is involved you the user are the product. At WhatsApp, our engineers spend all their time fixing bugs, adding new features and ironing out all the little intricacies in our task of bringing rich, affordable, reliable messaging to every phone in the world. That’s our product and that’s our passion. Your data isn’t even in the picture. We are simply not interested in any of it.

We aren't interested in user data. Well, Facebook sure is. Wonder how long that last part's gonna last.


In a blog post today, after Facebook made the acquisition announcement, WhatsApp co-founder and CEO Jan Koum wrote on the company blog:

WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

On a personal note, Brian and I couldn’t be more proud to be part of a small team of people who, in just under five years, built a communication service that now supports over 450 million monthly active users worldwide and over 320 million daily active users. They have helped re-define and revolutionize communication for the 21st century, and we couldn’t be more grateful.

Our team has always believed that neither cost and distance should ever prevent people from connecting with their friends and loved ones, and won’t rest until everyone, everywhere is empowered with that opportunity. We want to thank all of our users and everybody in our lives for making this next chapter possible, and for joining us as we continue on this very special journey.

Or then again, maybe this explains it:

Some context for thought:

(Gracias, BG, LG, and BB!)