What is WhatsApp?
A mobile messaging app. It uses the internet to send messages to friends and family.
Like text messaging?
To start with. When it launched, the big sell of WhatsApp was that users could send texts without having to pay for SMS messages. As well as appealing to young people, many of whom have few text messages included in their call plans, the app gained popularity for letting users chat for free across national borders, and with no cap at all on the number of messages sent.
But it’s changed since launch?
WhatsApp now lets users send photos, videos, and audio messages, as well as share their location using their phone’s built-in GPS. It also supports group chats, something SMS messages were never able to do, and lets users broadcast important messages to huge lists of contacts – though it’s up to them to define what qualifies as important.
And it does all this for free?
Nearly. The app offers a one year free trial, and after that it charges users just $0.99 a year. Even the company itself describes the charge as “a nominal fee”. When the company introduced the annual charge, it even made sure that pre-existing iPhone users, who had signed up when it was a one-off fee, got free service for life.
So it’s ad-supported?
No. WhatsApp has always been outspoken about its opposition to the ad-supported model, hitting at companies like Google who “know literally everything about you, your friends, your interests, and… use it all to sell ads.”
It sounds like it could be pretty popular.
The service currently has more that 450 million active users, and is adding a million more every day. It’s by far the most popular app of its type. And with all those users, Facebook says that the number of messages sent every day with WhatsApp – last reported as 18 billion – will soon be more than ever SMS sent in the world. So yeah, it’s pretty popular.
But is it $19bn popular?
That’s the much-more-than-a-million-dollar-question. Facebook’s hedged its bets somewhat – most of the money it’s paying for the company is in the form of Facebook stock, so if we turn out to be in a terrible technology bubble and Facebook’s value plummets, it won’t have wasted too much on the acquisition. However, it still spent $4bn in cash.
The value of WhatsApp to Facebook is its users. Hundreds of millions of people who fall squarely in demographics that the company is starting to struggle with: Europeans, young people, and those who eschew social media. And, more importantly, the company’s removed a potential future competitor from the table. WhatsApp, Instagram, Facebook – it’s all the same to them.
