(Image source from: Why Facebook acquired WhatsApp?})
In what is being dubbed as Facebook's largest acquisition so far, the world's biggest online social networking service has bought the cross-platform mobile messaging service WhatsApp for a whopping $19 billion, in cash and stock. And while some may worry about the astronomical price tag, for Facebook it might be well worth every penny.
Apparently Facebook made the drastic buy as it was losing a significant chunk of its users, especially the pre-teens and teenagers, who had moved on to mobile messaging apps like WhatsApp and WeChat, and for obvious reasons.
When Facebook CFO David Ebersman announced a significant drop in its teen users in October 2013, the confidence of the investors flailed, resulting in a volatile rise in the rates of its shares. Although the revenue potential of the site hinges on all demographic segments, it's the young consumers who fritter maximum cash on any online platform. They make up for more than $200 billion business and are of enormous interest to investors and companies everywhere.
Also, messaging apps offer private chatting with friends and people you know in real life. Instead of passively pursuing unknown people on Facebook, messaging apps offer real-time chatting with real-life friends.
The acquisition also comes at a time when Facebook is strongly shifting its focus on mobile. CEO Mark Zuckerberg famously quoted as saying that Facebook was a 'mobile company now'. And an inside report shows how Facebook is growing on mobile in certain countries
"Facebook seems to be in acknowledgment that people are using a lot of different apps to communicate," said eMarketer analyst Debra Aho Williamson. "In order to continue to reach audiences, younger in particular, it needs to have a broader strategy...not put all its eggs in one basket."
AW: Suchorita Choudhury
