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Facebook buys WhatsApp for $19 billion

Facebook buys WhatsApp for $19 billion

Facebook will buy WhatsApp for $19 billion (£11 billion) in cash and stock in what will be the social network’s largest acquisition, it has been announced.

The acquisition of the mobile messaging service – which has approximately 450 million users every month and one million new registered users per day – comes as the world’s largest social network looks for ways to boost its popularity, especially among younger audiences.

Last month it was reported that the number of 13-17 year olds using Facebook has declined by a sizeable 25% between 2011 and 2014, now sitting at less than ten million.

According to research from GlobalWebIndex, the number of 16-19 year olds using WhatsApp grew 160% over 2013, with 16% of the total internet population using the service.

Coming as a shock to many Silicon Valley observers, Facebook’s bid is significantly greater than that of its previous deal for photo-sharing site Instagram, which Facebook paid $1 billion for in 2012.

However, after announcing the acquisition of WhatsApp – which sends and receives 53 billion messages each day – Facebook’s shares fell $1.82.

Commenting on the news, Jason Mander, analyst at GlobalWebIndex, said that Facebook has made a “smart” move.

“In recent months, we’ve seen younger internet users – and teens most especially – moving away from the big social networks towards newer platforms like Instagram, Tumblr and Pinterest as well mobile messaging services and tools.

“Services like Snapchat, WhatsApp and WeChat have all enjoyed considerable growth as internet users look for more instant ways to communicate. With Facebook having already purchased Instagram, adding WhatsApp to its portfolio puts it bang in line with current social networking trends.”

If the deal fails to go through, Facebook will pay a ‘break fee’ of $2 billion.

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