Facebook buys WhatsApp for $19 billion

In a play to dominate messaging on phones and the Web, Facebook has acquired WhatsApp for $19 billion.

That's a stunning sum for the five-year old company. But WhatsApp has been able to hold its weight against messaging heavyweights like Twitter, Google and Microsoft's Skype. WhatsApp has upwards of 450 million users, and it is adding an additional million users every day.

That makes WhatsApp the most popular messaging app for smartphones, according to OnDevice Research.

Buying WhatsApp will only bolster Facebook's already strong position in the crowded messaging world. Messenger, Facebook's a standalone messaging app for mobile devices, is second only to WhatsApp in its share of the smartphone market.

Similar to traditional text messaging, WhatsApp allows people to connect via their cellphone numbers. But instead of racking up texting fees, WhatsApp sends the actual messages over mobile broadband. That makes WhatsApp particularly cost effective for communicating with people overseas.

That kind of mobile messaging services have become wildly popular, with twice as many messages sent over the mobile Internet than via traditional texts, according to Deloitte. But most of the messaging industry's revenue is still driven by text messaging.

On a conference call with Wall Street analysts, Facebook said it is not looking to drive revenue from WhatsApp in the near term. CEO Mark Zuckerberg said he doesn't anticipate trying to make money off of WhatsApp until the service reaches at least 3 billion users.

That indicates Facebook bought WhatsApp to keep its users locked into its messaging platform. Facebook bought Instagram for $1 billion in 2012 for similar reasons: As young social network users gravitated towards photo-sharing, Facebook wanted to scoop up what could have eventually become a big rival.

Facebook said it will pay WhatsApp $4 billion in cash and $12 billion in stock. WhatsApp's founders and employees will be eligible for for another $3 billion in stock grants to be paid out if they remain employed by Facebook for four years.

WhatsApp CEO Jan Koum will also join Facebook's board of directors.

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