Comment: Facebook gets a facelift with WhatsApp

FACEBOOK has updated its ­status. Mark Zuckerberg’s ­social networking giant, floated amid fanfare and furore on Wall Street in 2012, has splashed out $19 billion (£11.4bn) on messaging ­application WhatsApp. It is Facebook’s biggest acquisition to date.

Martin Flanagan
Martin Flanagan
Martin Flanagan

Some would say that, given the ­relentless internally generated growth of Facebook, the company already has the scale that means it should not need to be paying a hefty premium for control of other big businesses in related fields.

Zuckerberg obviously doesn’t feel that way, and one hesitates in doubting a billionaire nerd whose business track record looks pretty tidy to date.

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WhatsApp’s key selling proposition is that it allows users to send ­messages over internet connections from smartphones, while avoiding text messaging fees. The company claims it is pulling in one million new users a day around the globe.

OMG, as texts and tweets often proclaim – that is a sizeable business calling card. The deal is also another example of the way the digital world is turning cannibal.

Remember the concerns about Facebook itself in the past couple of years: fears about both its advertising potential and that its core market of younger people were reportedly ­coming to see it as unfashionable, and deserting in droves to Twitter.

The flight to mobile communications has been seen as Facebook’s Achilles’ heel. This acquisition addresses that directly.

WhatsApp is challenging texting on price, and Zuckerberg knows that is the key element in successful business models.

WhatsApp makes money by charging users a subscription fee of $1 a year, and it also offers a free model. In true digital-age business style, WhatsApp co-founder Jan Koum says the firm will operate “independently and ­autonomously” after it is subsumed in Facebook.

You have to laugh. Facebook, once leading-edge and pushing the electronic communication envelope all the way, is now like an ageing parent that a clever, stroppy teenage Whats­App is scared might embarrass it in front of its mates. Next thing its new parent might be dancing excruciatingly at the digital disco.

To be fair, WhatsApp has greater penetration in many overseas markets than its purchaser so it is clear exactly who is hitching a ride on who in this transaction.

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Facebook wants that massively growing customer base and the youthful cachet – facelift? – the new brand will bring to its older web-based partner.

The deal will make Koum and his co-founder, Ben Acton, billionaires.And the twist? This thrusting new business, dealing in astronomic figures in terms of both finance and take-out price, has just 50 employees. ­Awesome, dude.

Smooth runway for Flybe’s cash call

Flybe’s ambitious £150m stock market capital-raising – for a company whose whole stock market valuation is only a little more than £90m – shows there is investor appetite for the regional airline industry.

It is fortuitous, but hardly unhelpful, for the take-up of the placing and open offer of shares, that the west of England and Wales has been in many places cut off since the rainstorms and high winds began to take hold.

Airlines like Flybe, even if being radically restructured with this money, show there is another, quicker way to travel than train.