Facebook, which has long been on the prowl for the "next Instagram," appears to have found it. The social network will shell out roughly $19 billion[*] to acquire WhatsApp, the giant global messaging app, in a deal that puts the world's largest social network together with its biggest independent person-to-person messaging system.
[*] Updated purchase price to $19 billion to account for $3 billion in stock grants to WhatsApp founders and employees that vest over four years.
In a press release, Facebook said WhatsApp will continue to operate independently, much the way Instagram—the photo-sharing service Facebook acquired for $1 billion almost two years ago—does.
Go Mobile, Social Network
The acquisition is clearly intended to further bolster Facebook's relevance in mobile. While the social network has successfully retooled itself into a mobile powerhouse over the past year, its attempts to jump into the burgeoning global messaging market have never really taken off.
Facebook Home, its attempt to turn Android phones into Facebook phones, appears to have mostly died a gruesome death. Facebook Messenger, the social network's attempt to compete directly with WhatsApp and its rivals with a standalone app, hasn't exactly been a standout.
WhatsApp, by contrast, has been on a long hot streak. According to the release, more than 450 million people use the service each month, 70% of whom are active on any given day. WhatsApp is adding more than a million registered users every day.
In April, WhatsApp CEO Jan Koum said the company was processing 20 billion messages a day—eight billion inbound and 12 billion outbound. That's more than double what analysts believed Facebook's message volume at the time to be. In the release, Facebook said WhatsApp is almost as popular as all carrier-based texting services combined; its message volume, Facebook said, is "approaching the entire global telecom SMS volume."
Another Mobile Arrow In Facebook's Quiver
By joining Facebook as as an independently run service, WhatsApp may fit easily with the social network's current strategy of breaking out many of its services into standalone apps—some of them duplicative. After all, Facebook offers both Instagram and its own Facebook Camera as photo apps, so it can't do much harm to have multiple messaging apps as well.
Over time, it's entirely possible that Facebook will make WhatsApp work more readily with Messenger, such as by letting the apps access users' contact lists on both services. In a blog post, Facebook CEO Mark Zuckerberg said that because Messenger and WhatsApp service "serve such different and important uses," the company will continue investing in and improving both services.
A bigger question is whether Facebook will try to bring ads to WhatsApp, as it's done recently with Instagram. WhatsApp has long defiantly resisted advertising, instead charging users 99 cents a year for its service (although Android users get a free year up front). As for the future, CEO Koum issued this promise in a blog post:
Here’s what will change for you, our users: nothing.
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.
Koum, by the way, will be joining Facebook's board.
Facebook and Google have both reportedly taken passes at WhatsApp in the past. Just over a year ago, in fact, WhatsApp took the unusual step of denying a report that it was then in discussions with Facebook.
We'll be updating this story as we learn more.