$19 billion for WhatsApp? Not so crazy

On the Facebook/WhatsApp deal

wtopstaff | November 15, 2014 12:54 am

WASHINGTON – When Facebook offered to pay a sum that could end up totaling $19 billion – yes, with a “b” – for WhatsApp, it seemed an eye-popping amount of money.

But Amir Efrati, senior reporter for TheInformation.com, tells WTOP it wasn’t such an unbelievable price – in fact, someone else was offering more.

WhatsApp isn’t very well known in the U.S., but it has about 450 million users worldwide, about twice the users of Twitter, and by next year could be at a billionm Efrati says – the same number as Facebook.

“It’s growing incredibly fast all over the world,” Efrati says. “They’re crushing the competition everywhere.”

Efrati calls the acquisition “very much a defensive move,” saying that Facebook saw WhatsApp’s popularity, particularly in emerging markets, “as an existential threat, and so it responded.”

Efrati says that WhatsApp had no plans to sell, but that Facebook CEO Mark Zuckerberg “was very persuasive.”

WhatsApp is still a small company, with about 70 employees, 30 engineers, not many business people. “They had so much potential,” Efrati says.

Zuckerberg made WhatsApp CEO Jan Koum a director of Facebook, and “made a commitment to them that they were not just going to be lumped in as part of Facebook,” much like Instagram, also a Facebook property.

There was intrigue behind the deal, as well. Google was “obsessed with Whatsapp,” Efrati says. and Google CEO Larry Page met with Whatsapp CEO Jan Koum to tell him to stay independent – but if they wanted to sell they should sell to Google.

They offered to buy WhatsApp seveal times, including once for $85 million in 2010, and last year they offered Whatsapp money to keep them apprised if Facebook made a move, Efrati says. Koum declined.

“Google really wanted to make sure it did not end up in the hands of Facebook,” Efrati says. He adds that Page tried to stop the deal as late as last week and were prepared to offer even more money. “But WhatsApp had its mind set.”

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