February 22, 2014

$19 Billion for Whatsapp?!

Perhaps the Facebook purchase of Whatsapp makes sense under this scenario:
  • Facebook intends to own every online platform the world uses to communicate with its friends
  • Whatsapp is used in many countries around the world because, unlike in the US, texting is very expensive
  • Whatsapp has provided no financial information indicating that it is a profitable company
  • Whatsapps current users pay 99-cents for a year of unlimited texting and sending recorded messages, the app is free to download
  • yet, Facebook pays $19 billion for Whatsapp
  • Whatsapp has only 55 employees making the purchase price "insanely high."
  • Facebook agrees that Whatsapp will remain an independent entity and brand
  • Facebook is a publicly owned company and by law is required to maximize profits
  • Facebook, in order to maximize profits and not monetize the independent Whatsapp entity, reinvents Whatsapp, weakens it, or shuts it down and directs users to use Facebook's existing or redesigned platform
    • Making Whatsapp an irrelevant entity!
Threat to monopoly averted!

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