The Facebook WhatsApp Merger Will Be Extremely Costly
Michael Baxter — February 20, 2014 — Tech
References: whatsapp & theglobeandmail
With the news of the Facebook WhatsApp takeover, the social media pot is boiling. Facebook will be handing over the biggest check in its entire existence to acquire this messaging competition.
In a classic dog eat dog move, Facebook is buying their direct competition on the instant messaging front, WhatsApp. The platform has over 500 million users, and given the map, it rules most of the world of instant messaging. While Facebook has North America, WhatsApp controls all of Asia and much of Europe as well.
The Facebook WhatsApp merger will be culminated with a check of almost 20 billion dollars, which marks the most expensive acquisition in Facebook history and one of the most expensive in social media history altogether.
The kicker is that the founder of WhatsApp once applied to work at Facebook (and Twitter) and was denied both times. With this deal, the founder, Jan Koum, will be worth 6.8 billion, which is more than all the executives there minus the founder.
In a classic dog eat dog move, Facebook is buying their direct competition on the instant messaging front, WhatsApp. The platform has over 500 million users, and given the map, it rules most of the world of instant messaging. While Facebook has North America, WhatsApp controls all of Asia and much of Europe as well.
The Facebook WhatsApp merger will be culminated with a check of almost 20 billion dollars, which marks the most expensive acquisition in Facebook history and one of the most expensive in social media history altogether.
The kicker is that the founder of WhatsApp once applied to work at Facebook (and Twitter) and was denied both times. With this deal, the founder, Jan Koum, will be worth 6.8 billion, which is more than all the executives there minus the founder.
Trend Themes
1. Social Media Mergers - The Facebook WhatsApp merger is just one example of social media companies buying out their competition, highlighting an opportunity to identify potential targets for acquisition.
2. Instant Messaging Dominance - WhatsApp's widespread user base and international dominance, especially in Asia and Europe, demonstrates a disruptive innovation opportunity for companies to improve their own instant messaging technology and expand their reach globally.
3. Expensive Acquisitions - The staggering price tag of the Facebook WhatsApp merger is a testament to the immense value of social media and presents an opportunity to analyze the ROI of such high-cost acquisitions and explore alternative strategies for growth and expansion.
Industry Implications
1. Social Media - The Facebook WhatsApp merger highlights a trend towards consolidation in the social media space, with other companies considering similar moves to gain a competitive edge.
2. Technology - The dominance of WhatsApp in the instant messaging market showcases the need for continual innovation in the technology industry to stay ahead of the curve and meet consumer demands.
3. Investment Banking - The large price tag of the Facebook WhatsApp merger presents an opportunity for financial institutions to provide investment and advisory services for similar high-profile acquisitions in the future.
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