What’s the next big acquisition on Facebook’s plate? TechCrunch is reporting that it just might be the popular mobile messaging app, WhatsApp. If true, the deal further proves Facebook is aggressively targeting mobile.
The acquisition could be similar to the social network’s other big mobile deal, Instagram. At the time Facebook bought the photo sharing network, the company’s mobile approach was half-hearted at best. Some speculated that this was what spurred Zuckerberg’s last minute $1 billion buyout for the photo sharing app, although the acquisition value for Instagram depreciated to $700 million. At first the move was contentious and wrought with criticism, particularly fueled by the inflated price. But half a year later, the dust has settled, and the service is being more and more integrated into Facebook.
Now, it appears mobile messaging is the social network’s next conquest. Facebook developed their standalone Messenger app first as a service within its site, then expanded to mobile and desktop. As we all know, mobile growth is critical to Facebook’s future and what Wall Street is keeping a close eye on. Messaging apps have become bankable business, and pressure the SMS market. With Facebook flush with cash, which Wall Street can’t deny regardless of its fluctuating stock prices, the company can afford to pocket a messaging app. “Now social networks see mobile as an essential area for growth, it is natural that it look to existing, mobile social tools which are scalable,” Nimbuzz CEO Vikas Saxena tells me. “We see that less time is spent on the PC and more time is spent on mobile. It is natural then that social behavior on mobile is rising. We see this in our growing consumer base and in how our customers are using the social features of our application.”
It’s a surprisingly busy market Facebook’s getting into, however. A string of competitors from Asia including including Kakao Talk, LINE, Nimbuzz, and WeChat are slowly etching away at the Western competition. These are apps that Facebook needs to keep a watchful eye out for if WhatsApp is its acquisition target. To reiterate the popularity of these apps, Kakao Talk has 65 million users, LINE has 80 million users, Nimbuzz has 100 million users (7 million in the U.S.), and WeChat is topping the charts with 200 million users.
WhatsApp is smaller than some of these popular Asian apps, which could make it a struggle for Facebook to leverage internationally. It’s undoubtedly popular and has demonstrable traction at least presumably in the low hundreds of millions of downloads – WhatsApp doesn’t publicly release its numbers. But WhatsApp in its current state would make it difficult to grow outside of the West. Still, WhatsApp is one of the largest apps in existence – much bigger than Instagram, just to give you a little perspective on how big of a deal this would be.
But looking at the bigger picture, Facebook has slim pickings to begin with as far as messaging apps go. Kakao Talk is based out of South Korea, LINE is already the property of Naver, WeChat is owned by Tencent, and Nimbuzz while wildly popular may not have the brand value that its competitors would bring to the table. The number of Kik users pales in comparison to between the approximate 100-500 million Android installs of WhatsApp’s app (no numbers are available for the iOS version), and it simply isn’t as robust in features as its competitors. Although to Kik’s credit, it recently released an in-app card feature that displays media inside of the app including YouTube videos and drawings.
WhatsApp has been vehemently against advertising, which is the reason that the platform offers its app for $0.99 per year. On Android alone, WhatsApp could be raking in at least $100 million in yearly revenue, which is a sizable chunk of change. And at this point, it’s likely that Facebook wants WhatsApp more than WhatsApp needs Facebook, meaning it could pay a pretty penny for the app. The social network, as a data and advertising company would have access to your phone numbers as well, a very valuable asset. Then there’s the reason that Facebook Gifts could be easily implemented into the platform. Saxena, says that the most popular feature on Nimbuzz is its gifting feature.
The challenge at the end of the day is convincing WhatsApp co-founders, Jan Koum and Brian Acton, the value of the direction that its competitors are moving into and a reason for WhatsApp to join in on the trend. According to All Things Digital, the WhatsApp team says the deal isn’t happening: “The TechCrunch article is a rumor and not factually accurate. We have no further information to share at the moment.” Although if you read between the lines, there’s no outright denial of an acquisition. If WhatsApp isn’t the company Facebook acquires, that doesn’t mean the social network isn’t looking around for a mobile messaging app to pocket. And what Facebook wants, Facebook usually gets.
Edit: Added comments by Nimbuzz CEO Vikas Saxena.