By Dino Grandoni/ The Huffington Post
Mark Zuckerberg, founder and chief executive officer of Facebook Inc., smiles during an interview at the Newseum in Washington, D.C., U.S., on Wednesday, Sept. 18, 2013. Zuckerberg said helping 11 million undocumented U.S. residents is the most important aspect of immigration issues he’s exploring with congressional leaders during a Washington visit. Photographer: Andrew Harrer/Bloomberg via Getty Images
If Facebook can’t have Snapchat, it’ll reach deep into its pockets to buy the next best thing.
Late Wednesday, Facebook announced that it will buy the popular instant-messaging app WhatsApp for a staggering $16 billion sum upfront– $4 billion in cash and approximately $12 billion in stocks. WhatApps owners will also receive another $3 billion in restricted stock for the next four years as part of the deal.
Facebook has shown a keen interest in developing or, with its $173 billion valuation, buying mobile messaging apps. Last year, Snapchat, a 2-year-old app that allows people to send disappearing photos to one another, rebuffed a $3 billion offer from the social network.
But the 5-year-old WhatsApp is far more established, and has fetched its owners a far greater sum. By the end of 2013, it had 400 million monthly users, adding 100 million of them in the last four months of the year alone.
WhatsApp is essentially a replacement to traditional text messaging. But unlike costly texts, which eat into cell phone owners’ data plans, WhatsApps messages are sent over the Internet, making them free if a phone is connected to WiFi.
“Our mission is to make the world more open and connected,” Facebook CEO Mark Zuckerberg wrote on his Facebook page. “We do this by building services that help people share any type of content with any group of people they want.”
Zuckerberg promised that WhatsApp will operate independently within Facebook, similar to how the photo-sharing app Instagram has been kept separate from Facebook proper after it was acquired for $1 billion in 2012.
So far, WhatsApp has forgone ads and instead made money by charging 99 cents to cell owners after 12 months for use. The app is initially free to download. The subscription change is new territory for Facebook, which over its decade-long existence has reiterated again and again that the social network “free and always will be” on its homepage.
In a blog post, WhatsApp’s co-founder and CEO Jan Koum insisted that “nothing” will change for customers. That includes ads: “you can still count on absolutely no ads interrupting your communication,” he wrote. “There would have been no partnership between our two companies if we had to compromise on the core principles.”
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