Facebook buys into WhatsApp

Germany Chancellor Angela Merkel enjoys texting, like everyone else. 

Facebook has made one of the most expensive tech acquisitions in recent history this week buy buying WhatsApp for $19 billion.

The question is, what did Facebook just buyWhatsApp is one of the fastest growing apps in history: it’s got about 450 million users and the company says it’s adding one million new users a day.

Jalak Jobanputra, a venture capitalist at Future Perfect Ventures, said most of that growth is happening outside the U.S.:  

“So the WhatsApp customers, especially in the emerging markets in places like India are very young." 

But Jobanputra says, in emerging markets, WhatsApp also appeals to people of all ages because it’s basically free texting.

Ben Schachter, an analyst at Macquarie, says Facebook’s larger strategy of having competing apps that cover all the ways we communicate on mobile. The problem is WhatsApp’s path to making money is unclear.

It’s very hard to justify the price tag given the lack of revenue, given the lack of disclosures around the future monetization potential."   

There’s also the fact that WhatsApp doesn’t collect data and has nixed advertising on its apps. Facebook, which takes the exact opposite tact, says it’ll honor Whatsapp roadmap. But Schachter suspects that'll change in the future.

About the author

Queena Kim covers technology for Marketplace. She lives in the Bay Area.

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