It was announced last week that Facebook will be purchasing the worldwide popular instant messaging app WhataApp for $19 billion. Yes, you read that correctly. That is 19 “BILLION” dollars. The deal includes $4 billion in cold hard cash, $12 billion in upfront Facebook stock, and also $3 billion in restricted stock over a period of four years.

This is a huge power move by Facebook, proving they are not afraid to spend the money to acquire properties that they feel provide a huge value socially. With Facebook’s huge valuation it is allowing them to outright purchase anything that they have an interest in. Previously they tried to acquire mobile app Snapchat for $3 billion, an offer that the two year old company turned down.

WhatsApp is a five year old app that has really caught on and really picked up some serious user base at the end of 2013. There are currently over 450 million users that engage with the app monthly. The application added 100 million of those users in just the last third of 2013. It replaces traditional text messaging and sends messages over WiFi, saving the user form incurring data charges from their cell phone providers.

Mark Zuckerberg, Facebook CEO posted the following on his Facebook page:

Our mission is to make the world more open and connected. We do this by building services that help people share any type of content with any group of people they want. More than 1 million people sign up for WhatsApp every day and it is on its way to connecting one billion people.

So by “building services” does he mean opening up the wallet and spending $19 billion? Regardless, it is a very impressive purchase and a signal that Facebook is not going to sit stagnant. They will continue to make acquisitions that grow their brand and more importantly their social reach.

It has been noted that WhatsApp will continue to operate as is, similar to how Instagram continued on as its own identity after being purchased by Facebook.

Facebook’s own internal messaging platform is widely used, but they really wanted to gain some traction when it comes to messaging in their play for Snapchat. That didn’t work out so they introduced Instagram Direct, which allows users to send direct messages. It hasn’t caught on like Facebook had intended, so their aggressive offer for WhatsApp really lets you know how bad they wanted to get into the messaging space. Instead of trying to develop something and hope that it caught on the took out the checkbook and got what they wanted.

WhatsApp is extremely popular with world travelers as it allows them to keep in contact throughout the world without worrying about high international data fees. The app doesn’t have paid advertisements and instead relies on a subscription fee of 99 cents annually to use the app.

WhatsApp co-founder and CEO, Jan Koum assures users that the app will remain the same and it will not feature advertisements in the future. He posted this on the official WhatsApp blog:

Here’s what will change for you, our users: nothing…you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

What do we think? WhatsApp is a very successful app and if they continue to offer the app “as is” then it will continue to grow. Facebook now has access to a user base of 450 million and growing. It sounds like a $19 billion home run for everyone involved.

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