Friday, 21 February 2014

Facebook digs its own grave for acquiring Whatsapp

Facebook and Whatsapp
Facebook agreed to acquire fastest growing messaging app WhatsApp for $19 billion-- to pay $4 billion in cash, $12 billion in stock and an additional $3 billion of restricted stock to the founders and the company 55 employees. Even if the deal does not see the light of the day, Facebook will still have to pay $1 billion to WhatsApp.

WhatsApp has long been known to be Facebook biggest competitor, with 450 millio users and quality of engagement on Whatsapp is stronger than Facebook. Analysts say the messaging app could reach 1.5 billion users next year--one million people join a day. Buying the chat app gives Facebook peace of mind and a new way to make more money. But things could go wrong.

Now unlike Facebook, WhatsApp doesn't make money through ads, instead it charge its users $1after one year of using the app for free. One area Mark Zuckerberg would not give in to.

Now get ready to see ads appear all over the app. Forget about what Zuckerberg said. Facebook will monetize Whatsapp as soon as it can. And if that happenes, we would see a significant drop in Whatsapp user base because, many users who hate to see ads stick out like sore thumbs will say bye, bye to Whatsapp and move to other messaging services like BBM, Wechat and Hangouts.

Will you be unstalling WhatsApp? What do you use for messaging your friends.

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