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| Facebook to buy messaging app WhatsApp for $19bn | Facebook to buy messaging app WhatsApp for $19bn |
| (about 7 hours later) | |
| Facebook has bought messaging app WhatsApp in a deal worth a total of $19bn (£11.4bn) in cash and shares. | Facebook has bought messaging app WhatsApp in a deal worth a total of $19bn (£11.4bn) in cash and shares. |
| It is the social networking giant's biggest acquisition to date. | It is the social networking giant's biggest acquisition to date. |
| WhatsApp has more than 450 million monthly users and is popular with people looking to avoid text messaging charges. | |
| In a statement announcing the deal, Facebook founder Mark Zuckerberg described WhatsApp's services as "incredibly valuable". | In a statement announcing the deal, Facebook founder Mark Zuckerberg described WhatsApp's services as "incredibly valuable". |
| WhatsApp allows users to send messages over internet connections, avoiding text messaging fees. The company claims it is currently registering one million new users a day. | WhatsApp allows users to send messages over internet connections, avoiding text messaging fees. The company claims it is currently registering one million new users a day. |
| It makes money by charging users a subscription fee of $1 per year, although it offers a free model as well. | It makes money by charging users a subscription fee of $1 per year, although it offers a free model as well. |
| Silicon Valley's newest billionaires | |
| The deal to buy it includes $4bn in cash and approximately $12bn-worth of Facebook shares, plus an additional $3bn in stock to WhatsApp's founders and employees at a later date. | |
| On a conference call to discuss the deal, WhatsApp co-founder Jan Koum said he planned to operate the firm "independently and autonomously". He will also become a member of Facebook's board of directors. | |
| "We're excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world," Mr Koum said in a statement. | "We're excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world," Mr Koum said in a statement. |
| Mr Zuckerberg said the prospect of a deal was first floated just 11 days ago. | Mr Zuckerberg said the prospect of a deal was first floated just 11 days ago. |
| The Facebook founder said he believed WhatsApp was on track to have a billion users, but insisted he had no plans to place advertising on WhatsApp's interface, saying he did not think ads were the best way to make money from messaging systems. | The Facebook founder said he believed WhatsApp was on track to have a billion users, but insisted he had no plans to place advertising on WhatsApp's interface, saying he did not think ads were the best way to make money from messaging systems. |
| Once the deal is finalised, Mr Koum and co-founder Brian Acton are set to become Silicon Valley's newest billionaires. | Once the deal is finalised, Mr Koum and co-founder Brian Acton are set to become Silicon Valley's newest billionaires. |
| WhatsApp has about 50 employees in total. | |
| Siphoning billions | Siphoning billions |
| Cathy Boyle, a senior analyst at research firm eMarketer, said WhatsApp was valuable to Facebook for several reasons beyond advertising, including its younger user base and its popularity overseas. | Cathy Boyle, a senior analyst at research firm eMarketer, said WhatsApp was valuable to Facebook for several reasons beyond advertising, including its younger user base and its popularity overseas. |
| "WhatsApp actually has greater penetration in a lot of international markets than Facebook," Ms Boyle told the BBC. | "WhatsApp actually has greater penetration in a lot of international markets than Facebook," Ms Boyle told the BBC. |
| She added that it was notable that Facebook's chief financial officer David Ebersman referred to the telecommunications industry when discussing the firm's purchase. | She added that it was notable that Facebook's chief financial officer David Ebersman referred to the telecommunications industry when discussing the firm's purchase. |
| "WhatsApp is trying to siphon the billions that the telecom industry would make from [traditional SMS text messaging]" she said. | "WhatsApp is trying to siphon the billions that the telecom industry would make from [traditional SMS text messaging]" she said. |
| Ben Bajarin, from California-based technology consultants Creative Strategies, told BBC Radio 4's Today programme that the deal would allow Facebook to tap into a rapidly growing market. | |
| "WhatsApp is on a path towards a billion users," he said. "They're growing exponentially - much, much faster than Facebook. | |
| "For Facebook this is a key growth area where, even if they don't monetise this product, this is a way that Facebook can get the next billion smartphone consumers into their ecosystem... to touch them and engage with them in other ways than just the Facebook platform." | |
| Shares in Facebook dropped 5% in after hours trading before recovering slightly. | Shares in Facebook dropped 5% in after hours trading before recovering slightly. |
| Prior to this acquisition, Facebook's biggest purchase had been Instagram for $1bn in 2012. | |
| It had also reportedly offered $3bn to acquire photo messaging service Snapchat. | It had also reportedly offered $3bn to acquire photo messaging service Snapchat. |