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Facebook's $19 billion WhatsApp purchase

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Facebook is buying mobile messaging service WhatsApp for $19 billion in cash and stock, by far the company's largest acquisition and bigger than any that Google, Microsoft or Apple have ever done, according to the February 20, 2014 NY Daily News article, "Facebook to buy WhatsApp for $19 billion."

And the February 20, 2014 Reuters news article, "Wall Street sees sense in Facebook's $19 billion WhatsApp buy," explains that Facebook Inc's purchase of fast-growing messaging startup WhatsApp for an eye-popping $19 billion largely won approval from analysts, who said the deal made strategic sense as it will solidify the social network's position as a leader in mobile. Also see the news article, "Zuckerberg's Facebook buys WhatsApp for $19 billion."

No one's done this before

Facebook will buy the mobile messaging service WhatsApp for $19 billion in cash and stock, the company announced. “No one in the history of the world has ever done something like this,” Facebook Chief Executive Mark Zuckerberg explained, according to the February 20, 2014 news article, "Zuckerberg's Facebook buys WhatsApp for $19 billion."

But there's other companies bringing in the billions. For example, the Candy Crush cellphone game is going public. See, "Maker of Candy Crush Saga Cellphone Game Going Public, Valued at $5 Billion." Sure, it's a hot game right now. King, the firm behind hit mobile phone game Candy Crush Saga, is planning a U.S. stock market debut which some analysts think could value it at more than $5 billion and herald a flurry of technology company listings this year, according to that article.

Candy Crush Saga, is about moving candies to make a line of three in the same color. It sure is popular. In fact the game was the most downloaded free app of 2013, and the year's top revenue-grossing app

Besides the WhatsApp deal, there's also another deal brewing with the game Candy Crush Saga and the company that owns the game, King, and other games. If you check out how many times the game has been downloaded in 2012, the figure is staggering: More than 500 million times since its launch in 2012. It has to make money somehow. So even when the basic games are free, players need to pay for add-ons or extra lives. People who play games may have time on their hands or could be waiting in airports and train or bus stations.

The game also attracts people staying at home, such as mothers of newborns who aren't motivated by the thought or need inventing games or gadgets of their own. And people play to pass time and to escape from stress, such as playing the game while waiting to be called for an appointment, as in your dental or medical appointment.

King offers 180 games in 14 languages through mobile phones, Facebook and its own website, but is heavily reliant on Candy Crush Saga, which brings in about three quarters of its revenues, says the article, "Maker of Candy Crush Saga Cellphone Game Going Public, Valued at $5 Billion." The company reports that its games are played more than 1 billion times a day. So it looks like there's money in mobile device games for some who design these games and other apps that become popular.

Remember the boom and bust cycles

On the other hand, mobile phone game-playing usage is exploding. Games are commanding the lion's share of time spent. The successful flotation of Twitter in November and a surge in Facebook shares have fueled speculation that a string of technology firms could come to market, including Spotify, AirBnB and Square, as well as King. Stay tuned. As far as What'sApp, You first have to examine the selling point. It's a fast-growing firm. So for the present time, many of these social media activities are making a lot of money fast.

When people say, "what's up" which sounds like What'sApp, and is easy to remember the name spoken by millions frequently, they can count on Facebook buying out some of the competition, as new competition develops on a competitive social media market. In fact, there are universities offering a master of arts degree in Social Media (journalism) known as the (Social Media Degree | Univ. of Florida.) For now, social media means a lot of money if any given company is bought out and valued by Facebook. See, "Facebook Enters $16 Billion Deal for WhatsApp." The article discusses the cash plus the stock value added together which amounts to about $19 billion.

Then the NY Times also weighed today in with an article discussing the frenzy to acquire fast-growing WhatsApp

As the facts go, Facebook told the media on February 19, 2014 that it is paying, (now the figure changes again) merely $12 billion. The NY Daily News article noted that Facebook is paying $12 billion in Facebook stock and $4 billion in cash for WhatsApp. So the out of pocket cash amount has to be added to the stock value.

It looks like the WhatsApp's founders and employees — 55 in all — will be granted restricted stock worth $3 billion that will vest over four years after the deal closes, says the NY Daily News article. The February 20, 2014 Wall Street Journal article, "Facebook to Pay $19 Billion for WhatsApp," explains that Facebook's $19 billion purchase of the WhatsApp mobile messaging service ranks as the largest-ever purchase of a company backed by venture capital.

Another February 20, 2014 news report from USA Today, "First Take: Silicon Valley became downright silly with WhatsApp deal," questions whether the deal might be absurd. That article explains that when Facebook said it would plunk down $16 billion for WhatsApp, the article discusses whether at first the reporter may have thought the folks in Menlo Park, Calif., had committed a serious typo.

No, no typo. The deal translates to roughly 9 percent of Facebook's market value. In comparison, Google's biggest deal, Motorola Mobility, stood at $12.5 billion, while Microsoft's largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.

In a study last year, Northwestern University researchers looked at awkward Facebook encounters

Embarrassing Facebook posts cause certain people more anguish than others. A friend posts a picture on Facebook that shows you picking food out of your teeth. Awkward, says the December 9, 2013 news release, "Awkward Facebook encounters."

Such Facebook faux pas are common. But depending on who you are and to whom you allow access to your Facebook page, such embarrassments can cause greater anguish, according to a new Northwestern University study.

Embarrassing moments on Facebook for some? What's the strength of that emotional encounter?

"Almost every participant in the study could describe something that happened on Facebook in the past six months that was embarrassing or made them feel awkward or uncomfortable," said Jeremy Birnholtz, author of the paper, according to that press release, Awkward Facebook encounters. "We were interested in the strength of the emotional response to this type of encounter. "

People most concerned about social appropriateness (high self monitors) and those with a diverse network of friends on Facebook -- who allow access to co-workers, clients and friends, for example -- are more likely to strongly experience a "face threat," the study found. Whereas people who felt they had a high level of Facebook skills reported experiencing these kinds of threats less severely.

"Perhaps people with more Facebook experience, who know how to control settings, delete pictures and comments and untag, think they knew how to deal with these encounters or at least try to deal with them," Birnholtz said in the news release.

Birnholtz is an assistant professor in the department of communication studies at Northwestern and director of the Social Media Lab at Northwestern. The paper was presented last week (February 2014) at the ACM Conference on Computer Supported Cooperative Work and Social Computing in Baltimore.

Interestingly, people with a high level of general Internet skills -- who may understand the importance of online reputations -- also reported more severe reactions to face threats, Birnholtz noted in the news release.

These are the type of violations or threats people in this study reported experiencing most often:

  • Norm violations: This is the most common type of threat study participants reported experiencing (45 percent) and involves situations when social norms are violated and one's behavior is exposed in a way that could lead to social and emotional consequences.
  • Ideal self-presentation violations: This is the second most common threat reported (29 percent) and involves ideal self-presentation violations, when content posted is inconsistent with the manner in which a person wants to appear to his or her Facebook audience.
  • Association effects: These threats are a little less common (21 percent) and involve people worrying about their self-presentation because of how someone they associate with on Facebook is presenting himself.
  • Aggregate effects: This is the least common threat (5 percent) and it occurs when an individual's content gains higher visibility within his or her network as more people like it or comment on it. The unexpected attention can cause one to feel self-conscious about their self-presentation.

For the study, researchers recruited Facebook users through university websites and Craigslist. Only 15 of the 165 people surveyed had not experienced some kind of face threat in the past six months.

Participants were asked to describe a recent uncomfortable Facebook experience and rate the severity of the threat on a scale of one to five. Information about their personality type, Internet and Facebook skills, size and diversity of their Facebook network was also collected and assessed.

Examples of awkward Facebook encounters from the study follow:

  • Norm violation: "I went to a concert with a friend. I had to miss a mandatory meeting to be there … the friend didn't know I wasn't supposed to be going so tagged me in a status saying I was at the venue. My meeting friends found out and were super angry."
  • Ideal self-presentation violation: "I felt uncomfortable when my boyfriend posted an article about condoms on my Facebook wall ... my mom reads my Facebook, and I didn't want her to see that (even though she knows we are sexually active)."
  • Association effects: "A friend posted a link to an image that she thought was funny on my wall…I was slightly embarrassed because I did not find the image funny and I was worried about how my other Facebook friends would think of me for having the link on my wall. I did not want my other Facebook friends to think that I was the type of person to find the image funny."
  • Aggregate effects: "A friend of mine commented on a picture I forgot I had posted of me with my ex-boyfriend and it showed in the newsfeed."

Future research may focus on the specific actions people take to resolve face-threatening acts, Birnholtz said in the news release. In the meantime, people should think twice about a friend's Facebook audience before commenting on their content or posting to their page, he said.

Think twice about somebody's Facebook audience before commenting on their posts

"People can make bad decisions when posting to your Facebook because they don't have a good idea of your privacy settings and which friends of yours might see this content," Birnholtz said in the news release. "Facebook doesn't provide a lot of cues as to how friends want to present themselves to their audience." He said in the future Facebook could offer more pop-ups and nudges to help people think twice before posting a possible "threat" to a friend's page.

This work is supported in part by the National Science Foundation (IIS-0915081 and DGE-0824162). Other authors of this paper are Eden Litt and Madeline E. Smith of Northwestern University and Erin Spottswood and Jeff Hancock of Cornell University.

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