Neil Hughes
Before WhatsApp was acquired by Facebook this week for some $19 billion in cash and stock, the messaging service was being aggressively pursued by search giant Google, which reportedly offered $10 billion and also made a unique offer in attempt to ensure it wouldn't be outbid.
Facebook announced on Wednesday that it will acquire the popular online messaging app for $16 billion in cash and stock, plus an additional $3 billion worth of restricted stock units. CEO Mark Zuckerberg said he believes WhatsApp, which boasts 450 million active monthly users, is on a path to 1 billion users, making the company "incredibly valuable."
Another company that found WhatsApp worth a considerable sum was Google, which apparently offered $10 billion to acquire the company before the Facebook deal was struck, according to Jessi Hempel of Fortune. And while Facebook's deal comes with a board seat for WhatsApp founder Jan Koum, Google's offer reportedly did not.
But Google's pursuit of WhatsApp didn't stop there, as the search giant also made an "odd" offer to the service more than six months ago, according to The Information. Google was apparently willing to potentially pay millions of dollars to WhatsApp just for the right to be notified if and when it entered into acquisition talks with other companies.
Google's so-called "right-of-notice" offer to WhatsApp is said to be a unique negotiating tactic the company employs to be alerted about potential startup acquisitions. The strategy was reportedly employed after Google was caught off-guard by Facebook's $1 billion purchase of Instagram in 2012.
As of Thursday, WhatsApp ranks as the No. 6 most popular free application available on the iPhone App Store. With more than 5,000 user rankings, it's earned an average score of four-and-a-half out of five stars.
Nearly a year ago, Google was rumored to be well into negotiations with WhatsApp, and was allegedly considering a $1 billion price tag for the cross-platform messaging app. At the time it was claimed that the WhatsApp team was playing "hardball" in negotiations with Google.
Without advertisements, WhatsApp managed to pull in considerable revenue with a simple annual subscription fee. Users who download the application get the first year free, and pay $0.99 per year after that.
Both Facebook and Google already have their own popular messaging clients, with Google Talk available to users of Gmail and other services from the company, while all Facebook users have access to the social network's Messenger service.
Charles Martin
Malcolm Owen
Andrew O'Hara
William Gallagher
38 Comments
It just seems to me that Google is buying companies just for the sake of buying them. There's no rational at all for Google buying some of the companies they do other than buy them before someone else does. If I were a shareholder, I'd be upset at this. Its fine to buy a company if you have an intent on using it for an actual purpose to either release a new product, or make an existing one better, but buying one just for the sake of buying it before someone else does is just plain silly to me.
And it's March, 2000 all over again...
Just because you can do a thing, does not mean you should do a thing. Just because FB could outbid Goog doesn't mean it should have done so.
In fact, it's a shame FB couldn't merely succeed in goading Goog to buy WA, since I see little opportunity for advertising profit from WA's impoverished users. Instead, FB should have let Goog acquire WA and dilute their customer demographics, thus making FB users a more elite group, having greater value to advertisers. But no, FB is too worried about user-share. So score one for Google in this game.
Good lord that UI is hideous. I keep forgetting that's what iOS used to look like. :wow:
[quote name="macxpress" url="/t/162115/google-bid-10b-for-whatsapp-made-separate-odd-offer-before-facebook-deal-was-struck#post_2474873"]It just seems to me that Google is buying companies just for the sake of buying them. There's no rational at all for Google buying some of the companies they do other than buy them before someone else does. If I were a shareholder, I'd be upset at this. Its fine to buy a company if you have an intent on using it for an actual purpose to either release a new product, or make an existing one better, but buying one just for the sake of buying it before someone else does is just plain silly to me. [/quote] and where is all the tech user outrage at larger companies swooping up and buying smaller companies just because they can? Look what Google did with Motorola. They basically stripped Moto of the good bits and then sold off the stuff they didn't want. If Apple had done that the outrage would have been enormous.