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Facebook Set to Pay $16 billion for Messaging Start-up WhatsApp

WhatsApp logo
WhatsApp logo

Already the world’s most popular social networking site, Facebook breaks new records, this time for the reported $16 billion buyout of mobile-messaging start-up, WhatsApp.

The messaging service brings with it more than 450 million users, worldwide. Facebook, itself, currently has 1.2 billion users around the globe. Facebook Founder and CEO, Mark Zuckerberg, said in a release posted by Facebook on Wednesday, “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable.”

Although WhatsApp is growing at a considerable pace, perhaps more important for Facebook than the extra users is the window it opens for the future of social networking. Messaging apps allow users of smartphones to trade texts, pictures and even video clips without paying wireless carriers for the use of messaging services. The buyout also offers Facebook what it does not currently have, a strong footing when it comes to direct messaging.

The deal, worth $4 billion in cash and another $12 billion in stocks also gives current WhatsApp Chief Executive Officer and Co-Founder Jan Koum a spot on Facebook’s Board of Directors. WhatsApp founders will also receive an additional $3 billion in restricted stock units. That is not included in the previously mentioned $16 billion. The deal has been in the works for about two years, ever since Zuckerberg first approached Koum.

WhatsApp enjoys wide appeal worldwide, but lesser so in the United States. Users pay $1 a year for the service, with free service the first year. The company does not sell advertising.

This mega-billion dollar deal is the largest acquisition thus far for Facebook. The social networking site paid $1 billion for the photo-sharing app Instagram. At the time, Instagram had about 30 million users. Facebook also tried, but was unsuccessful at buying another messaging service, Snapchat, last year.

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