Facebook CEO Mark Zuckerberg and WhatsApp CEO Jan Koum have joined with an impressive $19 billion deal. The two met in February about the deal and Zuckerberg added the incentive of adding Koum to Facebook’s board. The advantage for Facebook is that WhatsApp is used internationally in areas where Facebook isn’t. This will give Facebook a more varied user population with a varied demographic. The deal will give Facebook access to WhatsApp’s 450 million global users. It is not quite clear how this will continue Zuckerberg’s quest to connect the whole planet, but he clearly has a plan.
This acquisition makes Facebook Silicon Valley’s top Dealmaker. They have made large deals before, but the large sum they forked over for WhatsApp makes Facebook the largest dealmaker over the search engine giant, Google.
It will take many steps for Facebook to connect the whole world. WhatsApp is one important step. They have many users in emerging countries like India, Mexico, and Brazil. Next, Zuckerberg may look to chat apps like WeChat, Kakao Talk, and Viper, which are primarily used in China, South Korea, and the Middle East respectively.
Facebook has just spent billions of dollars acquiring Instagram and now WhatsApp. It is unlikely the company will now continue to pursue the ephemeral photo app, Snapchat. Although Zuckerberg has made acquisition offers and campaigned hard for the company before, he is unlikely to continue his pursuit. Beyond Zuckerberg, the co-founder of WhatsApp, Brian Acton has issued some pretty harsh remarks against Snapchat and what the company offers so it is very unlikely a deal will occur.
Investors initially seemed wary of the Facebook/WhatsApp buyout, but after Zuckerberg and Koum spoke the shares went back up. Now only time will tell how the market will respond to this new acquisition.