Facebook has once again snapped up a smartphone app to add to its growing collection. And this time it purchased WhatsApp to the tune of $19 billion.
A mobile messaging app created by Jan Koum and Brian Acton, users who send messages through WhatsApp don’t have to pay SMS messaging fees. There’s no limit to the messages you can send, and it’s virtually free: after one year, users are charged 99 cents a year.
With reportedly over 450 million users in just five years, the team behind WhatsApp has been outspoken that it doesn’t and won’t be supported by ads.
According to Reuters, WhatsApp has a large number of young users, which is why it’s so valuable to Facebook. The social giant’s young audience has recently been transitioning away from the network.
The terms of the sale indicate that Koum and Acton will serve on Facebook’s board of directors, but will run WhatsApp independently, still with no ads. Koum wrote the following on WhatsApp’s 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.
It’s a pretty high price tag to pay. Reports indicate that the sale amounts to $4 billion in cash, $12 billion in stock, and $3 billion in restricted stock that will vest over four years.
Koum and Acton came from humble beginnings and are now billionaires. Take a look at this story on Forbes about the beginnings of WhatsApp.
Do you think Facebook will continue to purchase more startup apps? $19 billion is a considerable jump from the $1 billion purchase of Instagram. How high will the price go?
As a Long Island social media marketing agency CGT believes that the acquisition for WhatsApp is a clear statement that the fight for the mobile user is just heating up.