Facebook has confirmed that it will be acquiring WhatsApp in a mammoth $16 billion deal that includes cash and stock. Facebook is also throwing in an additional $3 billion in restricted stock units for WhatsApp employees that is due to vest over four years, giving the deal a value of $19 billion.
WhatsApp co-founder and CEO Jan Koum will join Facebook board of directors as part of this acquisition, though it is understood that WhatsApp will remain functioning as a separate entity much like Instagram after it was purchased by Facebook. According to The Verge, an SEC filing has been filed for the purchase.
“I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected,” says Mark Zuckerberg in a prepared statement. According to Facebook, the reason for such a buyout is for “Facebook to accelerate bringing connectivity and utility to the world”. Indeed, figures released by the company stated that WhatsApp has 450 million users a month, of which 70% are active users on a daily basis.
Jan Koum had also confirmed via a blog post saying:
“Today we are announcing a partnership with Facebook that will allow us to continue on that simple mission. Doing this will give WhatsApp the flexibility to grow and expand, while giving me, Brian, and the rest of our team more time to focus on building a communications service that’s as fast, affordable and personal as possible.”
One of the main worries of users upon hearing this piece of news is concern over the possible appearance of advertisements in WhatsApp very soon. However, Koum assured users that they need not worry about any form of “interruption” to communication from ads. He also responded to analysts’ queries by noting that both companies were more focused on the size of user base than how profitable their products are.
With the many hundreds of millions of users using WhatsApp to keep in touch with friends, privacy is a real issue that has been highlighted by observers in the wake of this deal. Some have even indicated that they will ditch WhatsApp for privacy sake. After all, will Facebook start to track user activities in order to “improve” their services? Only time will tell.