Facebook buys WhatsApp messaging service for $19 billion

The logo of mobile app 'WhatsApp' is displayed on a tablet on January 2, 2014 in Paris.

Instagram turns out to have been the deal of the century -- as in a sweet deal for Facebook. Mark Zuckerberg's company bought Instagram a couple years ago for just about $1 billion.

Late Wednesday, there was another acquisition. Somewhat... bigger.

Facebook announced it is buying WhatsApp, the messaging smartphone service, for $19 billion. WhatsApp basically lets users text internationally, free of charge.

"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable," said Facebook's Zuckerberg.

Facebook paid $16 billion for WhatsApp, plus an additional $3 billion in restricted stock that will be paid out to WhatsApp employees over the next four years.

Venture capitalists have been eyeing instant messaging technologies, like WhatsApp, as one of the most promising growth sectors for 2014. Think back to Facebook's $3 billion offer for Snapchat (the one they turned down).

Part of the reason a company like WhatsApp is valued at such a high price? It boasts 450 million monthly active users. And a lot of those users are in emerging markets. Facebook has seen its growth in developed countries, like the U.S., slow from market saturation. 

"WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide," said Jan Koum, WhatsApp co-founder and CEO. "We're excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world."

About the author

Ben Johnson is the host of Marketplace Tech.

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