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Why There’s Money in Messaging - Eventually
The WhatsApp acquisition shows how fast social space is developing. Every player is trying to work out how to monetise what they have before users move on to something else. Facebook needs growth and needs it every quarter. It’s value is based on what it’s going to be generating tomorrow - future earnings rather than today’s revenue. This is why it spent $1bn buying Instagram a while ago and why it’s been no secret that Zuckerberg wanted Snapchat (and when he could not buy it he tried cloning it).
This is where WhatsApp fits in. It boasts users – nearly half a billion people apparently using the platform each month. What’s more, it’s actually generating revenue – users pay 99 cents per year for the service. So there is plenty of potential to layer on additional services for more income. Facebook’s market price fell on the announcement of the acquisition, but recovered when Zuckerberg emphasised that he does not see advertising as the key to monetisation for messaging. It’s good that he’s realised that, but perhaps less re-assuring that he’s given no indication of how he will then recoup some of the $19 billion.
After all, with that sort of spend he could have bought over 100 Red Bull Formula 1 cars – or 2 nuclear submarines. Scary.