Acquisition of WhatsApp by Facebook: A Calculated Risk?
Case Code: BSTR459
Case Length: 19 Pages
Pub Date: 2014
Teaching Note: Not Available
Organization: Facebook, Whatsapp
Industry: Information Technology, Social Networking
Countries: US; Global
Themes: Mergers & Acquisitions, Growth Strategy
Abstract Case Intro 1 Case Intro 2 Excerpts
On April 10, 2014, the Federal Trade Commission (FTC) cleared the acquisition of WhatsApp Inc. (WhatsApp), the world's most popular mobile-messaging platform by US-based social networking giant Facebook, Inc. (Facebook). However, it warned the two companies that they must not go back on their commitments to user privacy including not using WhatsApp users' personal data for targeted advertisement. "We're pleased the FTC has completed its review and cleared our acquisition of WhatsApp. Naturally, both companies will continue to comply with all applicable laws after the transaction closes," stated Facebook.
On February 19, 2014, Facebook had announced the landmark deal to buy WhatsApp for US$ 19 billion. The WhatsApp Messenger, a cross-platform mobile messaging app, allowed users to exchange messages without having to pay for SMS. As WhatsApp Messenger used the same internet data plan used for email and web browsing, messaging did not cost anything. Apart from simple text messaging, users could send images and video or audio messages. After their first trial year of using the service, users needed to pay subscription charges of US$ 0.99. Every day, 34 billion messages were received via WhatsApp, one million new users got themselves registered on it, and 70% of users were active on any given day...
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