Facebook has sent a message out to its competitors by spending a huge $19 billion [£11.39 billion] to acquire mobile messaging startup WhatsApp.
The deal, which is comprised of $4 billion [£2.4 billion] in cash and $12 billion [£7.2 billion] in stock, gives Facebook access to some 450 million users of the service and will help it to tap further into the messaging space that is becoming crucial strand of the social media market.
"WhatsApp will complement our existing chat and messaging services to provide new tools for our community," Mark Zuckerberg wrote on his Facebook page. "Since WhatsApp and [Facebook] Messenger serve such different and important users, we will continue investing in both."
In terms of the WhatsApp brand and service, Facebook has promised that it will do nothing to change either and if the deal falls through it will pay a $1 billion [£600 million] cash break-up fee – the same amount that it paid to acquire the photo sharing service Instagram.
WhatsApp co-founder and CEO Jan Koum joins the Facebook board as part of the deal and the company’s founders will receive an additional $3 billion [£1.8 billion] worth of stock as part of the acquisition, on top of the $16 billion [£9.6 billion] in cash and stock.
"Goodness gracious, it's a good deal for WhatsApp,” said Jonathan Teo, an early investor in Snapchat. "Communication is the one thing that you have to use daily, and it has a strong network effect. Facebook is more about content and has not yet fully figured out communication."
WhatsApp passed Facebook as the most popular mobile messaging service late last year with 44 per cent of those surveyed saying they used the app at least once week with Facebook Messenger used once a week by just 35 per cent of users.
The messaging service also reported that it processed 27 billion messages in a 24 hour period earlier on this year, smashing its previous record of 18 billion that it set last New Year’s Eve. It also boasted back in December that it had passed 400 million monthly users, which no other mobile messaging service has so far reached and goes on to illustrate why Facebook has decided to spend such a lavish amount of money.
The last time Facebook splashed a large sum of money was back in September 2012 when it completed a $1 billion [£625 million at the time] deal to acquire Instagram and it has kept to its word by leaving the photo sharing service almost untouched.
It failed in its last public flirtation, with Snapchat, when the company founders rebuffed a reported $3 billion [£1.8 billion] for the service that now looks very small fry compared to the $19 billion [£11.39 billion] paid for WhatsApp.