LIVE FROM GSMA MOBILE WORLD CONGRESS 2014: Mark Zuckerberg, founder and CEO of Facebook, said WhatsApp – as an independent business – is worth more than the $19 billion he agreed to pay for it.
“It will be a huge business,” he said, referring to its rapid growth and promising subscription model.
Making his first appearance at Mobile World Congress, and headlining the first of this week’s Mobile World Live keynote sessions, Zuckerberg – under questioning from technology journalist and writer David Kirkpatrick – added that WhatsApp was a “great fit” with Facebook’s vision of connecting everyone on the planet.
As part of making that happen, Zuckerberg said he wanted to prove the business model of operators in emerging markets offering basic internet – as well as Facebook – for free.
“Why are the next two billion not on the internet?” he asked. “The reason is not because they don’t have any money, it’s because they don’t know the value of having a data plan or the services they can access.”
Under Facebook’s Internet.org initiative, launched last August, Zuckerberg spoke of “promising results” achieved with Globe in the Philippines and Tigo in Paraguay.
By ‘zero-rating’ data chewed up by their customers when accessing Facebook and other services, such as Wikipedia and weather information, Zuckerberg said both operators saw a doubling of mobile data subscribers within just three to four months. Customers were willing to pay for data once they had a free taster.
The Facebook CEO said he was looking at similar partnerships with three to five operators in the coming year – he said Facebook didn’t have the capacity to be involved in more – and build up evidence that the zero-rating business model works.
Offering Facebook for free, however, might not appeal to everyone.
Sheryl Sandberg, Facebook’s COO, reportedly asked Vodafone CEO Vittorio Colao to zero-rate content – a request which he rebuffed, saying it didn’t make sense.
Zuckerberg was at pains to stress the aims of Internet.org was for the good of the world, and that Facebook would probably lose money on it for “quite a while”.
Internet.org, whose founding members include Ericsson, Qualcomm and Samsung, flags up three key areas for connecting everybody on the planet: developing and adopting technologies that make mobile connectivity more affordable; using data more efficiently; and developing new business models.
An internet.org white paper called “A Focus on Efficiency” – published last September – revealed the scale of Mr Zuckerberg’s ambition. The current global cost of delivering data, said the executive summary, is around one hundred times too expensive to make it ‘economically feasible’ to provide basic internet services for everyone. Costs, then, need to fall dramatically, to 1 per cent of today’s levels.
Facebook reckons this can be achieved within 5-10 years in two ways: reduce network costs tenfold to deliver data, and build more efficient applications to shave data usage by the same amount. Multiply the two savings together and you get the hundredfold efficiency improvement.