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Facebook Buys Back Its Luster with WhatsApp

The news that Facebook is acquiring WhatsApp for $19 billion has many conjecturing that Facebook CEO Mark Zuckerberg is disrupting Faceboook before a competitor can by adding new messaging capabilities.  This is one interpretation but only part of the picture.

Functionality, Yes but User Base, YES!!

Certainly WhatsApp has seen phenomenal success as a social app. Its use could compete with and replace the use of Facebook in certain instances.  However, WhatsApp’s popularity has been driven by a youthful user base.  As boomers and parents have taken over Facebook, the iconic company has lost its luster as the bastion of hipster youth. In other words, Facebook is no longer cool.

The purchase of WhatsApp may help Facebook compete for screen share more broadly but the purchase is about buying Facebook back its brand and the audience that will keep the brand relevant.  The company’s previous purchase of Instagram was a precursor purchase that also acquired functionality but functionality that is of great significance to an audience of digital natives.

Moreover, What’sApp has seen its biggest use in Europe, Asia and Africa making it a nice complement to US-centric Facebook.  In this light, the $19 billion price tag starts to look more reasonable.

What’s your take on the motivations and implications of the WhatsApp acquisition?

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