Facebook is on course to bolster its mobile app portfolio with the $19 billion acquisition of messaging app phenomenon WhatsApp.
With WhatsApp set to continue to operate independently alongside Facebook Messenger, the company will be able to significantly boost the number of consumers it interacts with on a daily basis.
WhatsApp has 450 million monthly active users and a significant market leadership in Europe, Russia, China and Brazil. It is adding around one million users every day.
It is unclear how Facebook plans to monetise WhatsApp, however.
WhatsApp CEO Jan Koum said in his statement regarding the deal, that users “can still count on absolutely no ads interrupting your communication” and that the service will continue to be offered for a “nominal fee” — currently $1 per year in some countries.
“There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product,” he added.
Indeed, Mark Zuckerberg, the Facebook CEO, said in a conference call that monetisation of WhatsApp is not something he is overly concerned with for the next few years, with growth of the service and connecting as many people as possible the main objectives.
And it seems advertising will not be the approach taken to monetise the service: “I don’t personally think that ads are the right way to monetise messaging services,” Zuckerberg said.
The Facebook CEO did say he wants WhatsApp to become “a really great business”, referring to the subscription model as a “promising start”. He added that once the service reaches one billion or more users, there will be “many clear ways that we can monetise”.
This contrasts with the approach taken with Instagram, which although priding itself in having no ads prior to its $1 billion acquisition by Facebook, has since seen the limited use of advertising as Facebook looks to build it into a “sustainable business”.
Zuckerberg said in November that the company was planning to put more emphasis on its standalone apps.
Although the company has historically built a lot of its sharing features into “the core Facebook app” Zuckerberg said there are now a number of separate apps that “are each large services that help people share in different ways”.
The Facebook-WhatsApp deal follows the $900 million sale of Viber to Japanese e-commerce giant Rakuten last week which could have signalled the start of a messaging app acquisition spree.
The WhatsApp acquisition prompted investors to place a greater value on BlackBerry’s BBM messaging app, with Bloomberg reporting that the company’s share price rose by as much as 9 per cent following the news.