Two years after buying Instagram for $1 billion, Facebook bought WhatsApp in February 2014 for approximately $19 billion.
The barriers to entry in the market of new technologies become more and more narrow. To avoid the threat of new entrants, the digital companies like Facebook, Apple or Google can't and don't hesitate to put huge sum of money to buy starts-up which have a big potential. (like Amazon for Twitch). With more 450 millions of active users per month and an expectation of 1 billion users according to Marc Zuckerberg, we can remark that WhatsApp had a better potential than Facebook messenger, so it appears as a big competitor, that’s why Facebook needed and wanted to buy WhatsApp. This buy is in the strategy of a social operating system, to have more and more users and to gather two tools which are Facebook and WhatsApp the best ways in term of communication and share. This acquisition reinforce Facebook’s business model and strategy which are turn to the mobile world.
However, this acquisition is not an entry into the Asian or African market, because there are already many services such as Line, Wechat in Asia and Mxit in Africa. Furthermore, this quantity of money could lead to an internet bubble, because WhatsApp has only 20 million of turnover according to Forbes and this buy dropped of about 4% the Facebook stock price.
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| Whatsapp's Growth in Users |
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