Facebook closed the WhatsApp acquisition deal after getting US and EU approval, but the deal cost the company $2.8 billion more than previously expected.
Facebook (NASDAQ:FB) announced on Monday that as the acquisition deal Facebook had been working on to gain WhatsApp was nearing final approval and completion, and Jan Koum – the CEO and co-founder of WhatsApp would be joining Facebook’s board of directors.
Originally, the deal was noted to be worth $19 billion, but with Facebook’s rising stock prices since the deal was announced in February. It’s a big acquisition for the social network; however, this is a big deal to even the standards of Google, Microsoft, and Apple – who have never made a move of this magnitude.
The move though, while originally raised eyebrows at the cost, is expected to have a profound impact on Facebook’s overall mission. For years now, the company has been trying to monetize its messaging apps, and make the messaging experience one that attracts and draws more users, but with just limited success.
WhatsApp has a lot of users globally, though, and this could potentially be a second mission of the company. While, Facebook will also stand to gain significant ground having Koum on board, and having WhatsApp in Facebook’s portfolio, that doesn’t mean Facebook isn’t going after the more obvious marker.
WhatsApp has over 500 million global users, and many of those users are outside the United States. Brazil, Mexico, India and Russia are the countries where WhatsApp is most popular outside the United States. These are valuable markets that Facebook doesn’t want to forget about or alienate as they take WhatsApp into the Facebook fold.
This is the largest acquisition Facebook has pulled off in its still somewhat young lifespan. Previously, the largest acquisition Facebook had taken part in was the acquisition of virtual reality firm Oculus Rift – which cost the company $2 billion.
That alone should really give some perspective as to just how important this acquisition is to Facebook. The fact that the company was willing to pay more than 10 times what they paid for their next largest acquisition, for a company with technology that already has what many consider a good grasp on messaging.
However, while Facebook continues to take criticism for their security problems, and privacy issues within the messaging app, and users continue to take longer to get used to messaging being a standalone app, the purchase of WhatsApp could be beneficial on that front.