Franchise News

Facebook Purchases WhatsApp for $19 Billion

Feb 20, 2014 04:03 PM EST | By John Nassivera

Facebook, Inc. has bought WhatsApp for $19 billion, making it the biggest purchase in Facebook's history.

WhatsApp is a successful messaging service that allows people to use their smartphones to send texts, videos, and photos, according to Yahoo! News.

WhatsApp has recently experienced a great increase in its use. In fact, users who access the service monthly doubled to 450 million, The Wall Street Journal reported. This success puts WhatsApp ahead of Twitter Inc., which currently has a $30 billion value and 240 million users.

Facebook's chief financial officer David Ebersman stated the high price Facebook paid for WhatsApp is reasonable because of WhatsApp's growth and its potential to beat competitors and earn 1 billion users, according to The New York Times.

"The primary thing we focused on was how healthy this network is and the pace at which it was growing," Ebersman said. "We looked at other networks that have achieved those kinds of scale, and that helped provide a framework."

Altimeter Group analyst Rebecca Lieb stated Facebook may have seen WhatsApp younger demographics as a good reason to buy the service, according to The Wall Street Journal.

"This is clearly also a play at securing their base of younger users who are married to text messaging," Lieb said.

Facebook chief executive Mark Zuckerberg praised WhatsApp for its service in other countries and sees the service has a chance to grow, Yahoo! News reported.

"(The service) doesn't get as much attention in the U.S. as it deserves because its community started off growing in Europe, India and Latin America," Zuckerberg said. "But WhatsApp is a very important and valuable worldwide communication network. In fact, WhatsApp is the only widely used app we've ever seen that has more engagement and a higher percent of people using it daily than Facebook itself."

WhatsApp will continue to operate independently at its headquarters in Mountain View, Calif., which, The Wall Street Journal reported, is based near Menlo Park.

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