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Facebook Acquires WhatsApp: Buy the Competition or Diversify?
Posted on February 23rd 2014
So this week saw the quite surprising news that Facebook is set to acquire messaging service WhatsApp for a reported $19 billion, not much then! But for me it does pose the question in the social media and mobile landscape of whether Facebook’s major acquisitions are simply a ploy to buy the competition, or diversify into other areas and markets.
Taking that first theory, Facebook has a reputation of trying to buy out mobile platforms, most notably their successful acquisition of Instagram and again a few months ago with their failed bid for Snapchat. So you could argue that Facebook sees WhatsApp as a threat to their Facebook chat service, or any potential mobile platform that they might be developing in the future. Therefore, instead of sitting idle and watching WhatsApp rake in the money and become a competitor, they simply buy them! I mean it’s clever of Facebook to do this, as they clearly know what the market is doing and what’s (App) popular with consumers, and growing. But is this strategy a good one? I do feel Facebook is trying to become too embellished and wanting to become too much, and have their finger in all these pies. This could come to their detriment if they take their eye off their main channel, and basically the one thing they’re known for. So I suppose the saying would be. ‘If you can’t beat them, buy them’!
However, another school of thought is that it’s quite ingenuous of Facebook to buy out these companies, as they don’t have the skill, nor the user base to compete or create something such as a messaging app, or a photo sharing app in the case of Instagram. Facebook has tried and failed to diversify its platform into photo sharing and messaging, so the next best thing is to buy an established player. Acquiring WhatsApp is a smart move as here you have a very popular service that’s used by millions and growing everyday. Facebook doesn’t have to invest in R&D, product development or marketing, as the value of the WhatsApp branding will do that automatically for them. Thus, these diversification strategies increase Facebooks market presence and tap into knowledge and well-established brands to take them to the next level.
But what of the future of WhatsApp. Facebook say that nothing will change, and it will remain as it is. Well, it’s maybe only a matter of time before advertising comes into the picture! I do actually believe Facebook a bit when they say they’ll keep everything the same, as they’ve not radically changed Instagram, as so many thought they would.
To finish, here’s one final thought. Apparently looking back on the founder of WhatsApp’s tweets, Brain Acton was turned down by Twitter and Facebook for a job in 2009. Oh the irony.
Thanks for reading and please feel free to comment. In the meantime please follow me on Twitter @DigitalStuart