Facebook buys WhatsApp for a huge $19bn – how does that compare with other recent takeovers?Albert Ng 24th February 2014
Facebook announced last week that it will acquire the instant messaging provider WhatsApp in a deal worth an eye-watering $19bn (£11.4bn).
The social network already has its own mobile chat platform, but its traction has not nearly been as strong as other standalone chat apps such as WhatsApp and WeChat. The astronomical price paid for WhatsApp reflects how keen Facebook is to get hold of a lithe, mobile technology.
So what exactly does Facebook get for its money?
WhatsApp is a massively popular instant messaging app that allows its members to send individual and group messages using an internet connection, thus avoiding costly text charges. The service is free for the first 12 months, after which it charges users $1 per year. So Facebook gets itself a revenue stream, plus the potential to commercialise the product further with ads and sponsorship.
With over 450m global users and a further million said to join every day, WhatsApp’s technology clearly works in a way liked by the consumer. Facebook, therefore, has the potential to use this high-performing technology to make its own platform more mobile-centric.
Perhaps more importantly, of those 450m users around 70 per cent are said to use the service on a daily basis. That level of activity means the deal to buy WhatsApp will provide Facebook with huge amounts of data around real-time, mobile, social interactions. But the WhatsApp deal isn’t unique for Facebook. Recently, it announced similar plans for a $1bn takeover of social photo-sharing app Instagram. That deal also gives Facebook access to reams of real-time mobile data. And for both deals, Facebook assured the market it would kept the respective apps running as independent brands and not just roll them into its main platform.
So in recent times we have Facebook investing heavily in mobile platforms. No great surprise there, but even judged by the standard of recent tech investments, the Facebook deal to buy WhatsApp is huge. To put the size of the deal into some kind of context, it’s useful to compare the figure with other recent acquisitions.
The $19bn deal price is:
- Over eight times the price Ebay paid for Paypal in 2002 ($2.2bn)
- Over double the price Disney paid for Pixar in 2006 ($7.4bn)
- Approximately four times the price paid by News Corp. for Dow Jones in 2007 ($5bn)
- Double the price paid by Microsoft for Skype in 2011 ($8.5bn)
- One and a half times the price Google paid for Motorola in 2011 ($12.5bn) *
- Nineteen times the price Facebook paid for Instagram in 2012 ($1bn)
- Over four times the price Disney paid for Lucasfilm in 2012 ($4.05bn)
(* Google subsequently sold the mobile phone producer to Lenovo for $2.9bn earlier this year)
It’s clear from the figures above the WhatsApp deal is one of biggest tech/media acquisitions in recent years. With additional funding and expertise, WhatsApp may look to add to its roster of developers, engineers and marketers to enhance the product, but whether this will result in a boom in mobile technology and other related media jobs, only time will tell.