Magister Advisors discusses Facebook’s WhatsApp acquisition

 

By Victor Basta

Under Facebook’s ownership we can expect WhatsApp to ramp even faster, and extend its international reach even more aggressively. With the parallel sale of Viber to Rakuten, this means that two major ‘over the top’ messaging companies have traded hands into much larger players.

The WhatsApp deal is a conquest of another emerging platform by Facebook which is increasingly looking like a digital republic. WhatApp’s 400M+ user base is bigger than Twitter’s which has a higher valuation. The deal buttresses Facebook against a potential decline in engagement on its core platform and adds another convenient layer of engagement for those in its existing user base that don’t currently use WhatsApp and potentially better social integration for those that do.

It is also yet another blow to mobile service providers globally as it is essentially game over for text revenues. Mobile operators are the digital drug mules of the 21st century and this acquisition will only increase their burden.

The deal is akin to putting Messi’s legs on a sumo wrestler – offensive and defensive at the same time. Defensive in the sense that it locks another burgeoning social platform, alongside Instagram, into the Facebook republic. Offensive because WhatsApp is a malleable product and signals wider intentions for Facebook including potentially voice.

About the author

Victor Basta is managing director of Magister Advisors.

http://magisteradvisors.com/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s