I’d like to begin by presenting a question. Why would a billion dollar company purchase a small app start-up for $19 billion dollars? The answer is more complicated than you might think. Facebook recently purchased WhatsApp, an app that took in a shabby $20 million in profits compared to its new big brother company led by Mark Zuckerberg. But WhatsApp, a private messaging app, was labeled successful by Facebook’s terms, boasting 450 million users and counting. And when Mark Zuckerberg considers you a threat, he does something about it. The deal was relatively quiet. For the most part, news organizations and websites covered the story, while users accepted it and moved on. I, for one, am surprised this deal didn’t get more media attention. By that, I mean I’m shocked people didn’t freak out.
After all, $19 billion is the most any one company has ever paid for another tech company. $19 billion American dollars on something made up of signals and messages. When a person or company decides to make a purchase for an amount close to this price, they usually receive something physical in return. But Facebook didn’t need anything like that. What they needed was a guarantee of continued success. Mark Zuckerberg purchased WhatsApp to secure Facebook’s spot on the social media throne. Security has a price, and when it comes to a successful mobile app, that price happens to be $19 billion.
This seems to answer my first question of why Facebook would spend so much on a less popular app. The deal was designed to protect the company by knocking out the competition. We saw this a few years ago when the company acquired Instagram, and again when they attempted to purchase Snapchat. This article calls it the “world’s most expensive game of whac-a-mole.”
But this deal makes a major statement about the future of social media. It isn’t going away anytime soon.
Rewind five years to 2009. Could we have ever imagined we’d be here, in 2014, spending billions of dollars on one app? Inspired by this Imgur post, here are a few things that cost less than WhatsApp:
The Hubble Space Telescope - $10 billion
London Olympics - $10.4 billion
American Airlines - $11 billion
50 most expensive paintings ever sold - $5 billion
Aircraft carrier - $13 billion
We won’t pay for scientific technology to advance our knowledge of the social system and promote aerospace engineering, but by golly, you better believe we’ll be able to update our friends on what we ate for lunch.
Facebook has made it clear they are the star of the social media show, and they’ll take down any company who stands in their way. I’ll leave you with one more question. How big will we let Facebook get? If we don’t pay attention, they might just become the Google of social networking. When Comcast announced its plans to purchase Time Warner Cable, people were worried the company would become a monopoly by knocking out the competition. Although it’s on a much smaller scale, isn’t this exactly what Facebook is doing? So far, the company has made it clear they’ll do anything to stay on top, even if it costs them two years of profits and stock. They’re letting us, the users, know we can always check the little box that says “stay logged in,” and we will, because deep down we know Facebook probably isn’t going anywhere.
Mark Zuckerberg will make sure of that.