A Security and Exchange Commission document released today shows that Facebook is going to buy WhatsApp Messenger for $16 billion. Facebook published news of the acquisition with details about the deal between the two companies.
The deal includes $4 billion in cash and $12 billion in Facebook stock with an additional $3 billion in restricted stock. This means that Facebook has bet big on the potential of WhatsApp and its users. The deal hasn’t been approved yet but at this point, approval seems likely, especially since it was publicly announced by both companies. But what does that mean for Facebook and WhatsApp users?
Best case scenario
If WhatsApp does become a part of Facebook, the best case scenario is that the communication app will be left alone and allowed to continue to serve its users worldwide. Facebook Messenger is different because it provides service through Facebook while WhatsApp requires the use of a cell phone number.
According to WhatsApp’s CEO Jan Koum: “Here’s what will change for you, our users: nothing.”
This is an open-ended promise because while nothing is changing now, it could in the future.
But Facebook would be smart to allow WhatsApp to exist on its own, providing the same core experience while helping the app improve with the help of the development teams at Facebook. This would certainly mirror the experience of Instagram, Facebook’s last major acquisition.
Alternatively, WhatsApp developers could support development of Facebook Messenger to improve the app on Android and iOS. While Messenger offers a lot of options like free calling, Facebook users who use the app on iOS may prefer to use FaceTime or communicate through Apple Messages. Facebook Messenger is a good way to communicate with friends overseas, but with many other competing apps, it’s not one of the primary apps that people use.
Best case scenario: Just like Instagram, WhatsApp continues as a standalone app outside the Facebook ecosystem and Facebook Messenger gains a good amount of development experience from the WhatsApp team. Based on what happened with Instagram, this looks like the most likely scenario.
Worst case scenario
The absolute worst case scenario is that WhatsApp is closed and the development team is integrated into other projects at Facebook including Messenger. This is highly unlikely considering Koum’s promise that nothing will change for WhatsApp users.
Another possibility is that WhatsApp and Facebook Messenger could start a slow merge together creating a unified Facebook/WhatsApp app. This would allow Facebook to bridge the two user bases. It wouldn’t take much for Facebook to allow its users to add individual WhatsApp information.
If Facebook eventually decides to integrate both communication apps together, there could be a massive exodus from WhatsApp. Facebook Messenger wouldn’t be negatively affected because its chat services are available inside the Facebook apps.
Worst case scenario: WhatsApp and Facebook Messenger are unified, leaving WhatsApp users to decide it’s time to move on from the service and use something else.
A Facebook/WhatsApp combined app is the worst idea
Does this mean my friends will start to leave WhatsApp?
Based on reactions within Softonic’s editorial team and from what I’ve seen on Twitter, some WhatsApp users are already abandoning the app. In fact, its relatively new competitor Telegram claims it has seen subscriptions rise by 300% today.
Just how many users will leave will be affected by what type of acquisition this turns out to be. This is the biggest potential risk for Facebook right now, because when people start to leave a social network or app, its decline can sometimes be exponential. As it stands, WhatsApp is so popular that it looks unlikely that Facebook’s involvement will lead to terminal decline.
The real reason Facebook wants WhatsApp
As someone who uses multiple communication apps with friends in the United States, but also a large number in South Korea, I see Facebook wanting direct access to WhatsApp users in Europe. In the United States, I have never seen a person use WhatsApp to communicate with another person in the US. Even personally, I have only used WhatsApp when I needed to contact someone in Europe and that’s what Facebook is after.
WhatsApp is insanely popular in Europe and it’s an easy way to communicate between phone numbers of different continents. At Softonic, everyone I work with in the Barcelona headquarters uses WhatsApp because we have employees from all over Europe.
Facebook can gain a lot of traction in Europe with little problem by accessing the user data of European WhatsApp users. At the same time, the $0.99 service fee after the first year can bring a trickle of revenue for Facebook.
The acquisition of WhatsApp by Facebook is strategic. On the surface, it may look like a strange purchase for such a large amount of money. But looking at the data and the sheer number of users that Facebook will now have access to, it’s a forward-looking strategy for Facebook.