Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.
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 buy? WhatsApp 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.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.