How does Facebook gain financially from WhatsApp?

How does Facebook gain financially from WhatsApp?

With more than 450 million active users and million people seen signing up over WhatsApp, Facebook has simply stepped a big steps towards making loads of profits from the recent deal of 19 billion dollars. The historical deal that worked out between the owners of WhatsApp and Facebook has simply added an edge to this giant social media site in getting the most acclaimed and popular international mobile messaging services. The company CEO Mark Zuckerberg has the plans to operate WhatsApp independently rather than merging it with the giant social media site. Well, let’s check how Facebook has gained financially by acquiring this popular international mobile messaging service as under:

What is WhatsApp?

Well before you dig deep into the moot topic, let’s understand WhatsApp. Well, it is a messaging service, which is very much popular in Latin America, Europe and India. The users get free of cost messaging service, which help them to interact with their friends and known people all across the world that uses the same platform. You have the options to share, text, pictures and videos, which is carried out in fraction of seconds and that too at no cost. It came into being in the year 2009 and has presently more than 450 million active users and as per the Valley venture company called Sequoia Capital; half of the users were seen joining this service in the past nine months. In a sense, it has a much faster growing platform in terms of users as compared to the Facebook. This will certainly, going to benefit Facebook financially a lot. The experts visualize seeing one billion users in the one or two years, which the Facebook took ten long years to achieve.

What is there for the Facebook?

This is one of the most obvious questions, which people are seen posing all across the world. So, how Facebook is going to benefit (financially) by investing a whopping amount of 19 billion dollars for this historic deal, is an important question to answer. The fact is, Facebook is supposed to gain from this deal in many ways. As per reports, a sizeable amount of teen population, which has drifted from Facebook to the messaging services like WhatsApp is back to Facebook. Thus the crisis for teen demographics, Facebook has been facing will be resolved to a great extent. One of the fastest growing markets, which Facebook was seen lagging behind, would be accomplished with this deal.
If you look at the third quarterly report of Facebook of 2013, the chief financial officer David Ebersman, was seen a bit concerned about the slower earning in this period especially the younger teens. The decline of popularity of Facebook amongst the teens was the major worry of the company heads, however, with incredible deal; the lost crowd is more likely to return to Facebook family.

With this deal FB is at the top in Mobile messaging

With the acquisition of WhatsApp, Facebook is certainly going to be the number one player in mobile messaging service, which was one of the vital markets, in which the giant of social media was seen lagging behind. With two failed efforts of Facebook to acquire the photo messaging application called Snapchat and the poor performance of company’s own messaging application called Facebook Messenger (launched in the year 2011) was one of the biggest worry, which was addressed by this deal to a great extent.
With this deal, Facebook will now get a massive database of users all across the world, and more data is more money for the company. This will multiply the opportunities in order to understand the mobile messaging customers and this new format of communication by Facebook. Thus the company would be able to leverage the most by this mobile channel, which Facebook was seen lagging behind at. If you look at the users of WhatsApp, a sizeable amount of its users hail from developing countries, which again the Facebook was seen lagging behind. In a sense, this deal has simply accelerated the amount of people drastically.

Wrapping up

Interestingly, Facebook – the giant in social media was seen struggling in certain areas. This is due to a specific crowd, which was ironically seen big in number of WhatsApp. Hence with this deal, the flaws within Facebook seems to be diminishing, which means the company is all set to make huge money from this historic acquisition. Let’s wait and watch!
Author Bio: Claire Reed is a finance writer for no fee loans for bad credit. Loves to write about social media, technology and banking.