Why Facebook's $19b Purchase of WhatsApp Makes Sense

Kids have been snubbing this online version of a dinner table. But this deal is a door back to the kids, and to a billion more users.

The announcement that Facebook is buying mobile-messaging startup WhatsApp for $19 billion spread like wildfire on the Internet overnight Thursday. Jaws dropped at the news and mainly at the amount. But the bottom line is: the deal makes sense.

Facebook has been losing popularity among teenagers. It's been looking for a way to win them back – and to reach hundreds of millions of additional users around the world.

One analyst recently estimated that more than 11 million young people have left Facebook since 2011. Young users realize they don’t need to remain loyal to one platform – especially one that has become the equivalent of the family dinner table.

Many of them maintain Facebook accounts to stay in touch with family, but prefer chatting and interacting with friends using other means, like Snapchat, Instagram and Whatsapp.

The bosses over at Facebook know that if they don’t act and simply hope younger users will stay, they are sure to be disappointed. That's why they bought Instagram in 2012 and then reportedly also made a $3 billion offer to buy Snapchat (which was spurned). In the end, they spent a massive sum to buy the fastest-growing application of them all.

The WhatsApp acquisition enables Facebook to connect with those younger users, but not just them. According to data released by the social network, WhatsApp has more than 450 million active users and adds more than a million more every day. At that rate, it will reach a billion users in less than two years.

Technology news site VentureBeat also points out that Facebook isn’t only interested in younger users, but also in new users worldwide, saying that to keep growing, "the company has had to aggressively extend its reach outside of the U.S., Canada, and most parts of Europe."

A Facebook representative told the site that CEO Mark Zuckerberg "believes WhatsApp is on a path to reach a billion people" – but those billion are different from ones than Facebook is reaching.

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