Facebook has announced plans to acquire WhatsApp for approximately $16 billion. But users of the popular mobile chat service have been told by WhatsApp officials that nothing about the service will change.
The biggest question for users might be whether the acquisition will eventually lead to advertising on WhatsApp. The mobile platform has remained staunchly opposed to selling ads relying on a very low annual membership charge for its profits.
In a post on the official WhatsApp blog, CEO Jan Koum explained:
“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.”
For those using WhatsApp as an inexpensive texting service, advertising would make little difference at first, anyway. That is unless, as on Facebook, it eventually means extra costs to reach your entire network.
Small business owners and marketers have noticed that since the introduction of sponsored posts on Facebook, it can be difficult to get the exposure you once had for free while posting to your network.
On the other hand, for those seeking access to WhatsApp’s younger demographic, some kind of advertising service might offer an easier way to target that group.
WhatsApp is one of the social media communities seeing more participation from users in a younger demographic as teenagers are reportedly less interested in Facebook than they once were.
Facebook says it will acquire WhatsApp for a combination of $4 billion in cash and another $12 billion in Facebook shares.
In an official announcement from the Facebook Newsroom, the company insisted it was attracted by WhatsApp’s huge following including 450 million active members who use the app each month. Mark Zuckerberg, Facebook Founder and CEO, said:
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable. I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected.”
It is, of course, uncertain as yet, how Facebook will capitalize off this traffic without resorting to advertising. It also remains to be seen how much affect the Facebook acquisition will really have on the WhatsApp community.
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Having seen the performance of Instagram since its acquisition by Facebook it would seem that they’ll be allowed to maintain their independence. Users shouldn’t worry about it.
The other thing to remember is that, unlike Instagram, WhatsApp already has a functioning business model. The nominal annual fee, though very low, has already made the app potentially very profitable just by virtue of the sheer number of people using it. And that should only increase as membership continues to grow.
Facebook buy whatsapp that mean Goodbye your privacy. Now all the messages and conversation of your whatsapp will go into Facebook databases. We all know the privacy and security of our facebook accounts.
I think life is good without of this company spying on me or selling my information. Remember, “IF PRODUCT IS FREE, YOU ARE THE PRODUCT.”
You make a good point about the shared data, and that remains a big question that hasn’t been answered. WhatsApp claims it will be able to continue to run its network free of advertising. But, if Facebook has access to the data of its growing user base, in theory they will never need to sell a single ad on WhatsApp to profit from that massive data set.
I don’t have a smartphone, so I’m not too familiar with WhatsApp. What I will say though is that I don’t trust that there’ll be no advertising somewhere down the line. This is Facebook we’re talking about here. I can’t see them passing up on an opportunity to make (more) money.
Of course, there’s no way of knowing how long WhatsApp will remain ad free, despite the claims they’ve made to their users and the claims Facebook no doubt made to them as part of the purchase agreement. One thing to keep in mind, however, is that WhatsApp isn’t free like Facebook and Twitter. It’s just incredibly cheap. But when you consider the sheer number of users on this network and that each of them is paying an annual nominal fee, there is some money already in this business model. Add to this, as Dominic above points out, that Facebook may now have access all of that network’s user data as well, and there are probably benefits for Facebook whether they ever run ads on WhatsApp or not.
Ooooh, I seeeee re: access to user data. In which case, still works out super for Facebook, but oh dear, oh dear, oh dear for WhatsApp users. Hmm.
I really can’t beleive the price FB paid for this.
Do they know something we don’t?
What is the future look like for FB with the purchase of this company?
I wonder if I’ll find a reason to use the App. We shall see.
Thanks for reporting this.
The Franchise King®
$16 billion is a heck of a lot. But Facebook seems to think it’s worth it, and maybe it very well is.
But, whatever they spent on it has to be recouped somewhere. Time will tell how they go about doing that without monetising the way they usually do (several of which I don’t like).
If nothing else it is a cheap way to text to your network. That is, assuming all the members of your network have WhatsApp accounts. Frankly, I’ve found that to be the real downside. While the number of people using this app (450 million users monthly, according to Facebook) continues to grow, it doesn’t do much good if your connections aren’t among them.
Shawn, I don’t have WhatsApp, let alone a smartphone. Rarely have my friends asked me if I have WhatsApp (most assume I have a smartphone), so I assume they don’t really use it themselves either.