Everyone’s been talking about the recent acquisition of WhatsApp by Facebook, and I found a very interesting take on it from Yahoo Finance. The writer of the article mostly concurs with general sentiment – that Facebook overpaid. Overpaid in a major way. But he goes on to say that the acquisition makes no strategic sense at all.
The reason is that there are a lot of these messenger apps. WhatsApp is the biggest, but new ones come out every day. The newer Telegram Messenger app signed up five million users yesterday. These messenger apps all work the same, cost the same (very little to nothing), and do the same things – many even look the same, with similar colors and virtually identical layouts. What’s more is that the content they use is merely what we’ve already entered into our address books. If one app suddenly makes a change that you don’t like, there are plenty of options. So the apparent value is very low – these are interchangeable, right?
So why didn’t Facebook create it’s own version of the app and simply promote it to their network, which just so happens to be the largest on earth? For the cost of developing an app, they could have pulled off one of the biggest messenger app user bases around. Spend some of that extra money on a mega advertising campaign worldwide.
Instead, here comes Facebook making a monstrously expensive purchase on just one player in this interchangeable, disposable market space. There’s no sustainable revenue…in fact, the app has to remain free in order to retain their user base. WhatsApp wasn’t a threat – they’re not an identity company, one that you give your info to for public consumption. They simply hold an account for you to contact your own address book. Instagram was different – there was and is a huge advertising potential upon which Facebook has already capitalized in a big way.
But does this mean that Mark Zuckerberg simply made a rash decision with not enough oversight from his board, as posited by this editorial? Is this a simple win for WhatsApp and a necessary loss for Facebook? Should shareholders of the social giant be upset? Should Google be happy that they couldn’t get their hands on it? After all, they tried buying it for $10 billion, and there are reports that they even matched the offer from Facebook.
My question is, why does anyone need to be upset? Facebook just acquired the biggest global brand of messaging apps. They also acquired it at a time when the future for social networking is hazy…do you want to publish your thoughts for mass consumption and be aware of the goings on of your entire social network every time you go online? Or would you prefer to put that aside to some degree and enjoy a more intimate, meaningful interaction with those to which you’re closest?
I think Facebook is preparing for the future. A future that might involve people looking for alternative social networking avenues for different social purposes. After all, there’s something entirely more special about a game night with a couple friends and New Year’s Eve in Times Square.
