Why WhatsApp Makes Perfect Sense for Facebook

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Feb. 19 (Bloomberg) –- Gigaom Founder Om Malik, Techonomy CEO David Kirkpatrick and SK Ventures’ Paul Kedrosky discuss Facebook’s purchase of WhatsApp and figure out what it really means for the company. They speak to Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

Jury action?

I think it is a great move -- your reaction?

I think it is a great move.

For facebook, the idea is we are looking at them, talking about a billion users, that is a potential competitor they have just eliminated.

They have taken them out of the marketplace.

It reduces competition.

Especially in newer markets were facebook -- where facebook has not really penetrated.

This is a great move.

This is the kind of aggressive move you would expect from a founder-ceo.

David kirkpatrick, you wrote the book on facebook.

Is $16 billion, is whatsapp worth it?

I was hit upside the head when i heard the number.

You cannot help but say that it's ridiculous on first hearing it, but then when i look that the data and i thought about it and you think about the fact that twitter's market cap is $20 billion and it is infinitely smaller, the number of users are way less, the statistics are astonishing.

70% of users, on daily, which is higher than facebook, which is 60%. growing a million a day, it is very powerful in the developing world.

Facebook has this huge goal to grow globally.

Zuckerberg is about bringing more people onto the internet.

This service is achieving something similar.

If they really have the potential to reach a billion, there are very limited list of companies in this league.

Facebook, google, skype.

One that i would point to is we chat, which is the only similar service and it does something extremely similar coming out of china.

I cannot even think of another service in this league.

We chat is huge in china.

Is $16 billion ridiculous or not?

It is ridiculous, but it is the kind of ridiculous that makes a weird sort of sense.

We were talking about the most expensive acquisition on a per user basis, 15 years ago, the hotmail acquisition i microsoft -- by microsoft.

Weirdly enough, on a per user basis, you may or may not be instagram acquisition, you may or may not like microsoft buying hotmail, but there seems to be some universal process and respect to the per user.

The user numbers are so stunning that on a per user basis, this is the kind of number we have seen for sometime in these kinds of acquisitions.

450 million users of whatsapp . that is total users for twitter him and not monthly active users.

That is a very different statistic.

Twitter does not have anywhere near 230 million monthly active users.

On the conference call, facebook has been holding a call for the last several minutes talking about this acquisition.

Mark zuckerberg will continue to allow whatsapp to own -- to run independently.

Some people have said that kevin wanted back himself, is it possible to keep whatsapp operating completely autonomously?

Instagram is operating pretty independently, though the ads have come in.

They are still experimenting.

Whatsapp has to live as an independent entity.

We have been talking about whatsapp, there is the other trained -- trend happening right now.

Messaging apps are becoming conduits for selling other apps and other e-commerce related things, especially in non-developed markets.

There is a huge opportunity for facebook to take what they have found success with, which is app related advertising.

They can start to make money on that and not really offend the users of whatsapp that much.

How does facebook take whatsapp and turn it into a bigger business?

They charge a dollar a year to use the service.

How does facebook turn this into a business?

A ton of ways.

Cross marketing is a very powerful thing.

Even if they did not have ads on the service, they could use it to cleverly drive traffic to other businesses.

You are going to see all kinds of integration to the degree the users wanted.

They are just starting to charge that one dollar a year in some of the markets, as i understand it.

It will be able to increase their revenue as they go forward.

If people use it as much as we hear they do, and i have seen it myself, i think people probably would pay more.

It is a hard question to answer half an hour after we heard about the deal, but i do not think it is out of the question.

I would turn it around.

The point is to figure out exactly -- there is a punitive option going on.

It is worth this much to facebook because it was worth a lot to google and if i can hurt my largest competitor by outbidding them, there is some negative option alley.

Google plus is not exactly burying anyone with respect to its traffic.

Something google -- this is something google badly needed.

We keep talking about this is if it is $16 billion straight up in cash.

This is mostly facebook paper, which they are more than happy to print and use to stick something in the face of google.

We will talk a little bit more about what it means for google on the rest of the

This text has been automatically generated. It may not be 100% accurate.


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