Facebook buys WhatsApp in billion dollar deal

Facebook has announced it has bought popular messaging app WhatsApp, as the world’s largest social network looks for ways to boost its popularity, especially among a younger crowd.

The acquisition of WhatsApp was, according to Facebook, to speed up the company’s “ability to bring connectivity and utility to the world”. As part of the deal Jan Koum, the WhatsApp founder and chief executive, is to join the Facebook board.

Mark Zuckerberg, Facebook founder and CEO, said in a statement: “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.”

Part of WhatsApp’s appeal to Facebook is its huge volume of messages with more than 450 million people using it each month – 70 per cent of them active on any given day – and the number of new registered users rising by a million a day. What’s app could be described as the Skype of text messaging and Facebook are paying a hefty $19 billion in cash and shares for it (WhatsApp’s founders and investors will have to make do with just $4 billion in cash).

When it emerged that photo-sharing was becoming ever more important in social networking, Facebook bought Instagram. More recently an increasing amount of online chatter has shifted off the social networks onto messaging services, so Facebook buys the biggest of them too.

WhatsApp is also particularly popular in some emerging markets where Facebook wants to further build is reach, and – perhaps most interestingly – the messaging service is subscription-based rather than ad-funded. It’s a nominal subscription fee – and capitalises on the fact people are used to paying for SMS messaging, and by comparison WhatsApp is really cheap – but crucially it brings an alternative business model to the Facebook group, which promises it will leave the WhatsApp team to their own devices despite the takeover.