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Friday, 21 February 2014

why is Facebook spending so much money(19 Billlion $) for WhatsApp?

This is the fun part, because every tech pundit thinks they’ve figured out the “real” reason for the acquisition, when in reality everyone’s just making educated guesses.
If there is a “real” answer, it’s probably a combination of several theories, some of which are related. Here’s a sampling:
  • Facebook wants the photos. See the above statistics about how more people share photos on WhatsApp than on Facebook. It’s too big of an activity for Facebook not to own, says Sarah Lacy at PandoDaily.
  • Facebook is becoming a social media conglomerate. Kara Swisher at Re/Code paints Facebook as a Disney-like media giant. It may not be able to own every popular service, but it can become the dominant player with different tools like Instagram and WhatsApp in its arsenal. Each one does things that the other property can’t.
  • Facebook lives in fear of being disrupted in mobile. At this point, Facebook is pretty safe from becoming the next MySpace or Friendster, but it can’t risk losing peoples’ attention at the hands of newer, cooler apps, BuzzFeed’s John Herrman argues.
  • Facebook needs to expand its Europe and emerging markets presence. As TechCrunch’s Josh Constine notes, WhatsApp is huge in developing countries. Facebook could also use WhatsApp to help bring more people online through subsidized Internet, which Facebook already offers in some countries. The acquisition is a shortcut to owning those growing markets.
  • Facebook must buy its way into “ephemeral” and/or “dark social” communications. Just think about all the stuff you talk about, the photos you send and the links you share when you’re communicating privately — if not through WhatsApp then through something else like e-mail — instead of broadcasting to your Timeline. All that data is invisible to Facebook, unless you use Facebook Messenger. (And if Messenger was hugely popular, Facebook wouldn’t need WhatsApp.) WhatsApp can provide troves of data about the things we’re really interested in, which can then be used for targeted advertising on other Facebook properties. Alexis Madrigal’s 2012 post on Dark Social helps put this idea in context.
Oh, and Facebook’s official line is that it acquired WhatsApp to “make the world more open and connected,” which is probably as true as it is vague. Mark Zuckerberg always seems genuine in his world-changing ambitions, but there’s always the business side to keep in mind.
The overarching themes here are about attention and user data. WhatsApp has proven it can capture the former, and while Facebook says it has very little of the latter from WhatsApp, that can change, and messaging can become a rich data source for Facebook’s core advertising business. Perhaps that sounds scary, but it’s not much different from how Gmail works now.
How will we know when this starts happening? Just wait for the inevitable revision of privacy policies allowing WhatsApp and Facebook to freely share their data with one another.

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