Facebook’s Purchase of Whatsapp is a Much Bigger Deal Than You Think

$19 billion. How much is $19 billion? I can’t even understand how much money that is. I can’t understand how anything, no matter how sure of a thing it looks like, is worth $19 billion, especially in an industry where ephemerality is the norm.

Yet, here we are. $4 billion in cash. $12 billion in shares of Facebook. $3 billion to employees and founders in restricted Facebook stock, which will vest over four years. That’s how much Facebook is paying out to acquire Whatsapp, the messaging app known for its enormous international user base. The messaging app, which does the same thing as Facebook Messenger—basically, an SMS alternative as long as you can get all of your friends and family on board—had 400 million users as of late last year, with Facebook putting that number at 450 million in their press release about the acquisition. With an average of 1 million new users signing up every day, according to that same press release, 1 billion users is within sight, and with 70% of users active on any given day and a messaging volume that actually nears total worldwide SMS volume, you get an app with an enormous amount of value.

Now, all of those numbers belong to Facebook. The founders of Whatsapp had previously declared that they were uninterested in selling the app. It’s hard to say what changed—when you’re talking about the difference between a few billions of dollars and even more billions of dollars, I’m not sure increasing the amount of money changing hands even matters anymore. In fact, it almost makes you wonder if maybe the Whatsapp founders had some misgivings about the future, although looking at the stats, it’s hard to see why that would be the case.

For Whatsapp users, it’s hard to say for sure what’s going to happen. In a blog post, the founders of Whatsapp have averred that nothing will change—if I had a nickel for every time that line got trotted out after an acquisition, I wouldn’t have $19 billion, but I’d come away with a tidy sum nonetheless. It’s safe to say no changes will be implemented in the near term, but it’s very unlikely that Facebook will remain hands-off forever, and both parties surely know that.

Facebook, as a public company, thrives off of data mining for the sake of targeted advertising, and Facebook isn’t buying Whatsapp just to score its income from membership fees. Data from Whatsapp users will be used, somehow, in Facebook’s ad scheme. Sure, Facebook will love to have the inroads that Whatsapp provides into emerging markets, and they’ll love that user base, but everything leads back to ads. Whatsapp might not have ads in its service (for now, anyway), but that data isn’t just going to sit there on the vine.

Take Instagram. Ads actually did start appearing on Instagram after Facebook purchased it, and although Instagram has remained largely autonomous (as Whatsapp no doubt will), the wants and needs of Facebook will inevitably dictate the direction that Whatsapp takes in the future. The might mean bad news for Whatsapp users concerned about privacy, and while it’s unlikely there will be a mass exodus of users—Instagram is still doing just fine, thanks—there might be a chilling effect on the rate of new users coming in.

But, this all misses the bigger point. $19 billion. How in the world can this app ever be worth that much money? But, maybe that’s the wrong question. With the money that major tech firms have to play with now, and the relative lack of a need to innovate that comes with having that much cash on hand for acquisitions, maybe the sums of money being thrown around don’t really matter. All Facebook needs to do now is sell ads and stay relevant—if buying a messenger app (that will surely be popular forever, just like AIM) for $19 billion helps even a little with that, sure, why not?

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