By now almost everyone in the tech industry and then some would have heard about Facebook’s acquisition of WhatsApp.
If not you can read about it here.
Living in Asia you get a chance to see how methods of communication differs from the West and East and witness the surge in instant messaging emerge medium of choice and establish itself as one of three main forms of communication and connection to others, Facebooks core business. Connecting people.
But that begs the question, does that justify a $19 Bn buyout for not one but two companies which have yet to show a profit. The answer in my mind is a resounding no, not when Facebook had an opportunity to prove the value of its own advertising system by using that to facilitate the growth of its own chat program through a mix of Facebook Ads and using small fraction of that $19 Bn to develop and build a bigger network for its own chat programs through a variety of physical advertising and promotions.
Let’s presume for a moment that Facebook has got the kind of money lying around that Apple has and can afford to make such an investment. The next question that pops up is whether this augments Facebooks offerings to its audience.
Facebook and WhatsApp are fundamentally different and fill different needs. Facebook is connecting with your friends, family and colleges and sharing parts of your life with them. WhatsApp is different it’s primary function is communication with sprinkles of photo and video sharing thrown in. Using Facebook’s cloud WhatsApp can offer a much better service offering simple things like photo uploads and easy sharing. But the reverse isn’t true, WhatsApp is non intrusive and can’t be abused through advertising as of yet. Which is Facebook’s main income generator, apart from data sales.
Now we come to what I feel is the crux of the purchase, data. Data is valuable but is it worth $19 Bn? Without seeing the kind of data collected by WhatsApp it is tough to tell, based on my own usage probably not.
So, what can Facebook + WhatsApp offer? It can offer a better WhatsApp and build a network of services around it and possibly the opposite can come true over time. This purchase is not without merit, WhatsApp can evolve to its next state if left to grow untethered by Facebook and offer unparalleled services to its users thereby justifying the price spent on it, but that can be many years down the road.
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