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Facebook’s WhatsApp purchase given green light by EU Courts…but is $19.1 billion worth paying?
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Facebook’s WhatsApp purchase given green light by EU Courts…but is $19.1 billion worth paying?

by Samir6th October 2014

Facebook’s WhatsApp purchase given green light by EU Courts…but is $19.1 billion worth paying?

EU regulators have given Facebook the green light over their blockbuster purchase of messaging service WhatsApp, with the monumental $19.1 billion acquisition set to be completed in the next few weeks.

The social media tycoons had found themselves in European Courts after a number of telecom groups and privacy organisations called on their purchase to be halted until that time that they made it clearer what their intentions were for the personal data of WhatsApp users, and an investigation was conducted into whether they would contaminate the communication application consumer market.

However, the European Commission concluded that Facebook and WhatsApp were “not close competitors”, and as such the purchase of the latter by the former would not impact the number of selections that consumers would enjoy for communication apps.

The Commission also controversially ruled that despite growing concerns about Facebook’s usage of their account holder’s personal data – with WhatsApp now providing the company with two means of extracting their user’s personal information- that nevertheless privacy concerns could not be forwarded as legitimate grounds to halt their acquisition of WhatsApp because they “do not fall within the scope of EU competition law”.

Speaking in a measured statement about the court’s ruling, anti-trust chief Joaquin Almunia identified:

“We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market. Consumers will continue to have a wide choice of consumer communications apps”.

Members of the commission also argued that the two apps were utilised by consumers in varying manners and a large percentage used both “simultaneously on the same mobile handset”.

“Furthermore, this is a very dynamic market with several competing apps available on the market, such as Line, Viber, iMessage, Telegram, WeChat, and Google Hangouts.”

Why did Facebook pay so much for WhatsApp?

Facebook will be hugely boosted by the ruling, and will now be free to pursue their aim of assuming dominance in the mobile messaging industry over the next decade – an area of business which has hugely lucrative profit forecasts attached to it.

As well as being pivotal to the social media sites user levels – particularly with its quantity of young online users who are beginning to socialise more often on messaging apps such as WhatsApp – the acquisition will also help them to raise their profit margins in emerging markets such as India and China, where it is hugely popular and widely used.

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With lower bandwidth networks and higher frequencies of higher users, communications such as WhatsApp are serving as the primary social networks for the lesser developed world.

WhatsApp – an app which enables you to swap text messages and photographs with your friend and family groups through your phone – is heavily utilised in areas such as Spain, Japan, Holland and the U.S – but recent statistical analysis has also suggested that it is beginning to rise in prominence within upcoming markets such as China & India, largely down to the fact that they provide businesses with a low-cost differential to conventional text-messaging services supplied by traditional providers.

Because such a large number of people in these areas are accessing the internet via their phones – and not on standard computers – apps such as WhatsApp have become quasi-social networks, utilised instead of Facebook. This is reflected in the fact that it now has more than 600 million people using it across the globe, with a staggering 840,000 joining every single day.
Because their main online services are targeted at saturated areas such as America and Europe, social media authorities regard places such as India and China as the future of their expansion and money-making, which is why Facebook forked out such a hefty amount in order to purchase WhatsApp ahead of major competitors, Google.

Facebook is already looking into implementing low cost ads on old phones connected to lower bandwidth network areas like Asia and Africa – a clear sign that they see their future growth in these zones. Whilst WhatsApp currently remains free of ads, this will likely change in the future as they use their tried-and-tested techniques within their own search engine to induce revenue, such as ad targeting through user data usage, in order to financially profiteer from the social networks of lesser developed countries.

With Viber already offering competition in this area, and Google thought to have designs over introducing their own version of WhatsApp, it will interesting to see where the future of social media goes. With the U.S and European markets seemingly saturated after years of access and expansion, it appears that social media organisations like Facebook see their future in tapping into the less-developed markets. Whether their commitment to optimising their mobile messaging services will see a gradual change in the way that their core social media site works will be hugely intruiging, though what is for certain is their acquisition of WhatsApp has put them one step closer to global domination – an alarming reality for its competitors to swallow.

 

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About The Author
Samir
Samir Kadri is a content writer and co-editor for the Just SEO newsroom. Having run a multitude of social media campaigns over the past few years, he is hugely knowledgeable about how to generate a buzz worldwide, and regularly writes news and advice on the area of social media marketing.

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