In a stunning move, and just days before he’s set to attend WMC, Facebook CEO Mark Zuckerberg has announced that Facebook will acquire WhatsApp for $4 Billion cash, and $12 Billion in shares. The purchase dramatically changes the mobile messaging landscape, and positions WhatsApp as a clear leader over competitors Viber and Line. The acquisition is Facebook’s largest buy yet, and comes just five days after Japanese Telecom giant Rakuten purchased Viber for a purported $900 Million.
While WhatsApp co-founder Jan Koum has posted a blog that suggests the app will remain autonomous, some users have expressed the concern that the acquisition will degrade the privacy of the mobile messaging app. One move that will certainly raise alarm bells for privacy advocates is that Mr. Koum will be joining the Facebook Board of Directors.
However, the acquisition will likely not change the day-to-day operations of WhatsApp. In addition to the $16 Billion in cash and stocks, WhatsApp employees have been given $3 Billion in restricted stocks that will vest over the next four years – a move that suggests that Facebook is interested in the talent at WhatsApp, and not just the platform itself.
The deal also includes a clause that if the acquisition fails to be finalized, Facebook will pay WhatsApp $1 Billion in cash, and $1 Billion in shares.
While Facebook has said that one of its reasons for making the purchase is WhatsApp’s 450 million users (70% of which are active daily), questions will surely be raised about its own Facebook Messenger App. While it has the potential to have over a billion active users – and offers the same services as WhatsApp – very few people use it.
If we have learned anything from Instagram – Facebook’s last major acquisition – WhatsApp will likely remain independent of other Facebook services for now. That being said, this purchase is certainly a big step for Facebook in its race with Google and Amazon for total online domination.