On Wednesday, Facebook announced the latest move in its quest for mobile social domination: it plans to buy popular messaging app WhatsApp for $16 billion in a cash and stock deal.
If that sounds like a heck of a lot of money, it should. Facebook says it will pay $4 billion in cash and $12 billion in stock for WhatsApp, which lets users avoid paying SMS messaging fees by sending messages to others straight through its app (the app works on a variety of mobile platforms: iOS, BlackBerry, Android, and Windows Phone). WhatsApp’s founders and workers will get an additional $3 billion in restricted stock units that vest during the four years after the deal is done, Facebook says.
You might be thinking, “That’s like 16 Instagrams!” Well, on the face of it, yes. Facebook spent $1 billion for Instagram back in 2012, when it was the hottest photo-sharing app around—at the time, it seemed like an obscene amount of money.
But Facebook obviously thinks WhatsApp is worth far more, and some of the numbers it shared about WhatsApp’s users indicate why. WhatsApp has 450 million monthly users, 70 percent of whom (310 million) use the service daily. Instagram, by comparison, currently has one-third as many monthly active users.
Facebook also noted that the number of messages being sent through the company’s service is “approaching the entire global telecom SMS volume” (according to telecom market researcher Informa, this was expected to total 19.5 billion last year). And the app continues to bring in over a million new users each day.
That’s the kind of growth that Facebook can’t ignore if it wants to remain a leader in social networking and communication, and the company knows it. As more and more users migrate to messaging apps like WhatsApp, it behooves Facebook to own the hottest of the bunch. Smartly, it’s keeping the WhatsApp brand, as it did with Instagram, which will probably help it keep up its growth.
But beyond the question of whether or not WhatsApp is worth the money Facebook is eagerly shelling out for it, another is bound to emerge as the acquisition moves forward: what’s the next WhatsApp?