WhatsApp: 2nd Biggest Tech Acquisition of All Time 257
Nerval's Lobster writes "Facebook CEO Mark Zuckerberg decided to drop a cool $16 billion on WhatsApp, a messaging service with 450 million users. It was a mind-boggling sum, even if you buy into Facebook's argument that WhatsApp (which will continue to operate as an independent subsidiary, at least for the moment) will soon connect a billion people around the world. But it wasn't the biggest tech acquisition of all time: that honor belongs to Hewlett-Packard, which bought Compaq for (an inflation-adjusted) $33.4 billion in 2001. Facebook's purchase of WhatsApp comes in second on the list, followed by Hewlett-Packard's purchase of Electronic Data Systems for $15.4 billion; Google's acquisition of Motorola Mobility for $13 billion, and Oracle snatching up Peoplesoft for $12.7 billion. In sixth comes Hewlett-Packard again, with its Autonomy buy in 2011 (for $11.7 billion), followed by Oracle's BEA Systems acquisition ($9.4 billion) and Microsoft seizing Skype ($9.0 billion). What do many of these highest-cost purchases have in common? Many of them didn't pan out. Hewlett-Packard's Compaq, Autonomy, and EDS acquisitions, for example, made all the sense in the world on paper, the tech giant eventually took significant write-downs on all three (Autonomy in particular was an outright disaster, resulting in a $8.8 billion write-off and widespread allegations of financial and management impropriety)."
Update: 02/20 19:32 GMT by T : Of interest: Mother Jones has an interesting take on the seeming mismatch between Facebook's business model and the way the WhatsApp founders think about advertising. Hint: they hate it.
Re:CNN argues it's worth the money (Score:5, Insightful)
Skype? Hah. Remember ICQ?
The funny thing is Facebook bought for billions a company which makes software running over XMPP. THAT was pathetic.
Who needs advertising when you can sell the comp.. (Score:5, Insightful)
Who needs advertising when you can sell the company for $16B? They'll just punt the founders and add in-stream/in-text ads related to the content of the text streams the user recently engaged in. Done.
AOL/TW doesn't count? (Score:4, Insightful)
AOL/TW was, by far, much larger than HP/CPQ.
May be related (Score:5, Insightful)
Re:CNN argues it's worth the money (Score:5, Insightful)
I suspect many WhatsApp users have it free. I do. Anyone who used it before they "monetized" doesn't pay. If they change that, or if Facebook starts mucking with it, I'll use something else.
There are a LOT of free texting programs, and it takes about a weekend to write another one. Extracting sixteen billion dollars from WhatsApp is going to be an exercise in futility. Hopefully the WhatsApp people are laughing their way to the bank (and selling their FB stock as fast as they can).
Re:Facebook bought WhatsApp to kill it (Score:5, Insightful)
Their entire philosophy is screwed up - charging people for things that should be free (leaving a contract) and giving away stuff that should cost money (smart phones).
They hope to confuse people and make money off of their stupidity, rather than to offer a simple, clear, fair deal and make money from intelligent choices.
Re:(Over valued)^2 (Score:5, Insightful)
Re:Facebook bought WhatsApp to kill it (Score:4, Insightful)
Their policies DO make sense if you don't think about it.
I hope the payment was cash and not stock (Score:4, Insightful)
Re:CNN argues it's worth the money (Score:5, Insightful)
They didn't pay $19 billion for the app. They paid for the userbase. From what I read it's about 450 million, which would make the purchase price about $42 per user. A little steep, but not outlandish in advertising terms. Now they have to figure out how to hang on to those users and grow the user base.
Re:CNN argues it's worth the money (Score:4, Insightful)
no, it isn't pathetic. what facebook bought was a large userbase. same goes for microsoft with skype, rakuten with viber, etc.
Privacy? Is your activity a property right? (Score:4, Insightful)
What is privacy these days? The USPS tracks every letter, or at least takes a picture of it (who knows what they do with that). The phone company always knew who you called, but they didn't care. Your mailman sort of knows what mail you got. Your friends, etc know what you like.
The question isn't about privacy, because that was always an illusion. The question is who do you want to know what?
Do I want google, and by extension advertisers (or entities in the advertising programs), to know anything about me? Amazon? Apple? My phone company? The government?
At least in the US, everyone sort of has an advertising profile. Who gets access to it and why? You have no real control over that.
Sometimes, advertising can be convenient. When you're looking for a car, it'd be nice to get a whole bunch of, say, test drive for dollars coupons.
Sometimes, it can be bad - like when you get medical condition related ads at home when you didn't want anyone else to know.
At some point the public needs to have the ability to take control of this information somehow. It's unclear how that's going to happen. Are online footprints considered property rights?
The real reason this happened... (Score:4, Insightful)
From what I understand WhatsApp requires you to use a real phone number (your cellphone number in fact) in order to receive text messages via your data plan rather than the SMS plans that cost extra with many carriers.
Sure, Facebook has a messaging app but they don't have your phone number. You can give it to them but I suspect that most people either leave it blank or put in a fake number. I suspect that a large part of this deal is getting a hold of that huge phone book that WhatsApp has now. Once FB has your cellphone number they can serve up ads to you via text messages even if you are not logged on to FB. Or maybe they will just sell your number to someone else.
Just watch - they will bury this 10 layers deep in the service agreement where nobody reads it. Next thing you know you'll be bombarded with junk...all in exchange for "free" text messaging. It's one more reason not to trust Zuck and company.
I'm not a WhatsApp user but if I were I'd be closing my account and looking for an alternative - pronto.
Major companies worth less (Score:4, Insightful)
To give you an idea of how ridiculously overpriced WhatsApp is (and Facebook as well), here's a selection of major American companies with a market cap less than what Facebook paid for WhatsApp.
Retail:
Macy’s
Gap
Bed Bath & Beyond
Tiffany & Co.
Ralph Lauren
Staples
Avon
Tech:
LinkedIn
Netflix
Xerox
Nvidia
Travel:
Marriott International
MGM Resorts
Hertz
Delta Air Lines
United Airlines
American Airlines
Southwest Airlines
Food:
Chipotle
Hershey’s
J. M. Smucker
Campbell Soup
Tyson Foods
Dr Pepper Snapple Group
Monster Beverage
Molson Coors Brewing
Other:
Harley-Davidson
Mattel
Whirlpool
Western Union
H&R Block
McGraw-Hill
News Corp
The Carlyle Group