News Column

Facebook, WhatsApp deal shapes future of industry

February 21, 2014

By Suchit Leesa-nguansuk, Bangkok Post, Thailand

Feb. 21--The most recent global acquisition of mobile messaging app WhatsApp by Facebook for US$19 billion looks set to shape the future of social mobile commerce industry, say leading e-commerce players and research firms.

Facebook Inc is placing a $19-billion bet on reaching its next billion mobile users with the acquisition of WhatsApp, a popular messaging service that lets people send texts, photos and videos on their smartphones.

The deal is by far Facebook's largest and bigger than any involving Google Inc, Microsoft Corporation or Apple Inc.

Earlier this month Rakuten, the Japanese online retailer, bought Viber internet messaging and calling service for $900 million as it moves into social networking. Viber will provide a distribution channel for Rakuten's digital products.

Facebook said on Wednesday that it was paying $12 billion in stock and $4 billion in cash for WhatsApp. In addition, the app's founders and employees -- 55 in all -- will be granted restricted stock worth $3 billion over four years after the deal closes.

The transaction translates to roughly 11% of Facebook's market value.

In comparison, Google's biggest deal was its $12.5 billion purchase of Motorola Mobility, while Microsoft's largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.

Facebook's$1 billion Instagram deal seems like a bargain in retrospect. Capturing mobile users ? and young people ? was a big reason behind Facebook's 2012 purchase of the photo-sharing app. Even its reported $3 billion offer for disappearing-message app Snapchat pales in comparison. Snapchat rejected the bid.

Teera Kanokkanjanarat, senior ICT analyst of Frost & Sullivan (Thailand), a global research firm, said both acquisitions of Facebook and Rakuten showed that mobile commerce in social media platform are gaining momentum.

Social media communication on smartphones has begun to influence Thai consumer shopping habits in a big way.

Although still in its infancy, "social mobile commerce" or m-commerce has dramatically changed the way brands reach consumers, making it faster and easier for them to make purchases on smartphones.

Not a few global e-commerce players including Rakuten, Zalora and Lazada are gearing up to promote their online marketplaces by selling products via Line apps which have over 22 million users in Thailand.

Mr Teera said the Rakuten's acquisition deal will likely offer its customers a new shopping experience and increase sales revenue.

The move by Facebook would strengthen its presence and accelerate Facebook's ability to bring connectivity and utility to fast-growing WhatsApp, which is on course to connect 1 billion people.

WhatsApp has 450 million monthly users, 70% of whom use it every day. The service adds a million new users a day. There are 19 billion messages sent and 34 billion received via WhatsApp each day, in addition to 600 million photos and 100 million video messages.

"The number of messages sent over WhatsApp nearly equalled the number of SMSs sent last year," Mr Teera said.

Mr Teera said WhatsApp users can create their Messenger accounts linked to their mobile numbers and contact lists.

He said the Facebook deal will not have any immediate significant effect in the Thai market.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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