This week saw Facebook snap up mobile messaging service WhatsApp for an astronomical $19bn- marking the biggest tech purchase to date. The move has sparked many comments from the industry- we take a look at some of the key quotes as chat apps come of age…
Victor Basta, managing director of Magister Advisors:
“The WhatsApp deal is a conquest of another emerging platform by Facebook which is increasingly looking like a digital republic. WhatApp’s 400M+ user base is bigger than Twitter’s which has a higher valuation. The deal buttresses Facebook against a potential decline in engagement on its core platform and adds another convenient layer of engagement for those in its existing user base that don’t currently use WhatsApp and potentially better social integration for those that do.”
“It is also yet another blow to mobile service providers globally as it is essentially game over for text revenues. Mobile operators are the digital drug mules of the 21st century and this acquisition will only increase their burden.”
“The deal is akin to putting Messi’s legs on a sumo wrestler – offensive and defensive at the same time. Defensive in the sense that it locks another burgeoning social platform, alongside Instagram, into the Facebook republic. Offensive because WhatsApp is a malleable product and signals wider intentions for Facebook including potentially voice.”
Rupert Staines, UK MD at RadiumOne:
“The simplicity of WhatsApp means advertising is an unlikely route to generate revenue which means Zuckerberg will probably look to other paid for services, such as a mobile wallet, as the cash cow. Facebook will now look to strengthen its grip on advertising in the mobile space by connecting WhatsApp to your Facebook profile.
“Ultimately, creating a one stop shop for your digital self might be Zuckerberg’s goal but whether advertisers and consumers’ preferences elect to unite and follow him is quite another. The acquisition of WhatsApp does not drive huge commercial value in the short term, but it does put a stake in the ground for the direction that Zuckerberg is taking Facebook.”
Laura Dinneen, Director of Strategy at social media agency BLOOM Worldwide:
“Facebook has tried and failed to own mobile messaging in the past and while Facebook Messenger is used fairly widely, it has nothing on WhatsApp in terms of usage, especially across European markets
“This acquisition puts Facebook back in the game in terms of mobile messaging, and reignites itself with the youth market, but where does this fit with the wider Facebook beast? They are on a mission to become a media company so we’ll see tonnes more content and advertising options. But to maintain usability they need to provide utility. So we will see more app acquisitions and launches for Facebook over the next year or so.”
Jamie Hockin, Strategy Director, Collider:
“There is a lot of Facebook maths going on right now as people try to figure out how a free app can possibly be worth $16bn. Some analysts have pointed out that WhatsApp has good market penetration in markets that Facebook is still trying to crack or currently has low user levels in. However, it’s a big leap to assume that simply by acquiring the app, that WhatsApp users will independently start to interact with Facebook. This is crucial to the success of the deal, as Facebook will want to migrate users from WhatsApp, where there are no adverts, to its own platform in order to monetise them. How long can WhatsApp really remain independent? One thing is for sure, there are interesting times ahead.”
Read our own take on why Facebook spent 19 times more on WhatsApp than Instagram here.