Acquisitions in Silicon Valley seems to be very alive nowadays. One of the most surprising ones to be reported this week was from an unlikely company. Although social network giant Facebook has been acquiring other companies to boost up its features, its recent acquisition took everybody by surprise. Not in the sense that the acquired company is not something that Facebook can use. It is because of the huge price tag that came with the acquisition. Facebook is acquiring mobile messaging company WhatsApp for a cool $19 billion.
Many experts are trying to make sense of the new acquisition, said to cost Facebook $4 billion in cash along with $15 billion in Facebook shares. WhatsApp is a popular smartphone app that lets users send texts and photos to each other without paying for SMS charges. It uses the 3G and WiFi networks to do its job. It has an estimated 450 million users and is expected to reach a billion users in several years time.
But unlike other acquisitions, WhatsApp will be operating independently as a company separate from the social network. This will help position Facebook to boost up its presence on mobile phones through another app. It will also help Facebook gain a foothold in the Chinese market. Currently, Facebook is banned in China. WhatsApp is not.
With the new acquisition, Facebook may be trying to build itself as a company with a portfolio of other products and not just one. It may be an investment move made at just the right time since the social network has steadily been experiencing a drop in the number of its younger users. With the WhatsApp acquisition, Facebook gains to enter the world of mobile messaging. With the mobile market gradually becoming the Mecca for advertisements, any company as big as Facebook should be thinking about the move to mobile. But many experts still cannot get over the huge price that this recent acquisition was able to snag. It seems that small companies still have a chance to hit it big in Silicon Valley.