Another Day, Another Multi Billion Dollar Acquisition
Late last week, Facebook made Silicon Valley history with their $19 billion dollar acquisition of WhatsApp, the mobile messaging app. WhatsApp previously declined a $10 billion dollar offer from Google before closing Despite the large price tag on the transaction, Facebook investors didn’t blink at the news and share prices remained steady after the deal was announced. But what motivated the big move and what does it mean for the future of Facebook and Silicon Valley?
Facebook is Losing Steam
It’s no secret that Facebook is losing relevance, especially with the new generation of digital natives. Zuckerberg’s creation has been around for 10 years now and while Facebook still makes headlines, it is far removed from the Silicon Valley startup it was in 2004. You can check out a recap of your digital life here if you haven’t already.
Facebook needed to buy WhatsApp in order to keep their userbase from dwindling to a slow crawl. WhatsApp already has 450 million users and it’s increasing at numbers as high as a million a day. The new users will definitely bolster Facebook’s enrollment, but the personal focus of WhatsApp is a departure from Facebook’s mass-sharing model.
Mr. Zuckerberg, Tear Down This Wall!
The purchase of WhatsApp and the rollout of Facebook’s new iOS app, Paper, may signal a wider transformation for Facebook. Paper takes the ‘same old’ Facebook experience and transforms it into a fresh and enjoyable visual interface.
A newly imagined Facebook won’t spring up overnight but in order to continue being a major competitor in this era of rapid innovation, a drastic overhaul needs to occur.
Driving the Digital Social Divide
Facebook’s ability to offer $19 billion dollars for a tech merger is a story in itself. The tech sector in Northern California has recently been targeted by protestors and the WhatsApp acquisition is not going to change their minds anytime soon.
With $19 billion dollars, Facebook could have funded the annual aid budget for the United Nations and provided relief for the victims of Typhoon Haiyan in the Phillipines combined. Of course, giving away massive amounts of money might make good press but it isn’t necessarily good business.
WhatsApp isn’t the only multi-billion dollar tech merger this year—and it’s only February! If the price of technology acquisitions continues to increase, the entire tech industry may soon find themselves out of touch with its consumers and become its own worst enemy.