Much has been said about the purchase of WhatsApp by Facebook in the last week for $19 billion dollars. Many reasons have been offered about why Facebook would want to buy WhatsApp, and these reasons seem to revolve around being able earn revenue from WhatsApp through advertising and other means.
It seems to me that many of the opinions expressed about the acquisition of WhatsApp by Facebook seem to centre on being able to justify the cost against how that money can be recouped by Facebook. In my opinion, to do so is to not understand why Facebook is currently so valuable in the first place and why it must neutralise emerging threats to its dominance by buying them out or using other means.
Having used WhatsApp ever since it emerged into the public sphere I have enjoyed the ease with which one can connect to other people and communicate. Indeed, users don’t even need to connect with others in order to communicate. If you know the mobile number of a person you can start firing off free messages to them right away.
WhatsApp also allows users to create distinct groups of people who may never know the presence of the other groups. This means that the user can have a professional ‘above-board’ dialogue and share content with a bunch of peers whilst also maintaining a bawdy chat with a group of close friends without any concern that one will crossover into the other. There is no concern about any inappropriate politically incorrect midget joke, for example, being mistakenly presented to the user’s boss!
Herein lays the rub. As a Facebook user I have lost count of the many times that I have questioned myself over whether I should post a particular message or political opinion. “Once it’s on the Internet it’s out there forever” is an adage that may or may not come to be incorporated into our current social media usage culture. Yet Facebook wants us to share. Sharing is the means to engagement with other users that gives Facebook its utility and creates the marketing opportunities. In the age of social media, sharing is the currency generated for the social media platforms by their respective users.
Because sharing is so valuable to Facebook, the leading social media platform, surely it must be a concern to Facebook that there are 450 million users on WhatsApp, increasing by a million users a day, who are sharing content discretely and in a way that doesn’t seem to touch the public Internet space. This allows users to avoid the privacy and litigation concerns that they may have when sharing content on Facebook.
Facebook has done much to address privacy concerns but ask yourself how much confidence you have in putting up a not-suitable-for-work picture on Facebook and relying on your Facebook profile and list management settings from not allowing your boss (or partner) to see it.
With WhatsApp you can simply share to the list that you have created for a specific purpose where you can let of steam and enjoy the loose talk and gossip. You can get instant feedback gratification by sending content to certain people who you know will be interested in what you are sharing.
Facebook would be very enthusiastic about the prospect of users being able to get over their privacy concerns and generating sharing currency for Facebook by using it in the way that they use WhatsApp.
I do not know if Facebook has noticed a dip in its usage that can be attributed to WhatsApp usage but at the rate of its current user growth WhatsApp could quite easily become the dominant platform for sharing. WhatsApp could further realise its potential and decide to make a few tweaks to further intrude into Facebooks social media realm.
The amount paid for WhatsApp is a heavy price tag, but it is a worth paying if it means that Facebook is able to maintain its dominance on the sharing playing field. If Facebook did not buy WhatsApp then the danger is that WhatsApp would morph into the preferred sharing platform. Facebook thinks that for WhatsApp $19 billion dollars is a price worth paying if it means that the value of Facebook continues to grow and obstacles to its core business and consequently annual increase in gross income are removed.
It is difficult to conclude that Facebook purchased WhatsApp for its potential advertising revenue alone without ignoring the fact that there is as yet no direct mechanism for generating money from a messaging platform that would practically generate the amount of money that Facebook paid for WhatsApp. How many messaging platforms generate an annual income that is in the billions of dollars?
Facebook may now look to see how it can incorporate WhatsApp into its overall strategy (maybe it could use WhatsApp groups as targets for Facebook posts), it may try to gain some revenue from WhatsApp by realising advertising opportunities and it may even increase the cost of purchasing or subscribing to WhatsApp.
Despite all these potential opportunities, the purchase of WhatsApp by Facebook only makes sense if viewed from a strategic perspective. It’s the sharing, stupid!