20
Feb
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Facebook's $19 billion purchase of WhatsApp was certainly yesterday's biggest story when it came to web and social news. But according to Amir Efrati of The Information, there's an interesting backstory that didn't make it into the financial pages. He reports that six months ago, Google offered to pay WhatsApp to notify the larger company if they received an acquisition offer from anyone else. While an exact amount hasn't been disclosed, the deal was reportedly worth "millions of dollars."

The Information's anonymous sources say that WhatsApp declined the offer - surely a hard pill to swallow for a startup company, even one with the fantastic number of users that WhatsApp boasts. Almost a year ago reports that Google was buying the messaging service were vehemintly denied by WhatsApp. Another source in the story reports that Google has tried to buy WhatsApp on multiple occasions going back to 2010, each time ending in no deal.

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It's easy to see why both Facebook and Google would want WhatsApp. As the one of the largest SMS alternatives in the world, it's a communications platform that could be useful to either company, and a liability in the hands of the other. Google has its own SMS alternative in Hangouts (two, if you count Google Voice), but Facebook's mobile presence is currently limited to its apps, which run through Facebook servers and don't interface with conventional SMS systems.

The more interesting question, assuming that the report is true, is whether or not Google has used this early warning tactic in attempts to purchase other startup companies. Google gobbles up startups like nobody's business - in the last six months they've bought or acquired Bump, Boston Dynamics and several other robotics companies, Nest, Deepmind, and SlickLogin. Getting access to innovative tech and the minds behind them is important, but in some cases it's equally important to keep them out of the hands of competitors. And even if Google used this tactic with companies they didn't intend to buy, they could potentially make the acquisition hurt for the competition by creating an under-the-table bidding war.

In that sort of situation, a startup would have to weigh the benefits of a significant cash influx versus the advantage of confidentiality. It's always better to have more information than the other guy, which is presumably why Google might make an offer like this in the first place. If WhatsApp did indeed turn it down, they probably thought the money wasn't worth potentially souring a deal with another buyer.

Source: The Information

Michael Crider
Michael is a native Texan and a former graphic designer. He's been covering technology in general and Android in particular since 2011. His interests include folk music, football, science fiction, and salsa verde, in no particular order.

  • henry

    People seem quick to dismiss Facebooks acquisition as outrageous but clearly there is something with Whatsapp that is making the giants at Silicon Valley very interested. I think Facebook plans to make Whatsapp the de facto new standard of messaging to completely replace SMS across the world in the next 10 years.

    If you think about that then it's well worth $19bn dollars.

    • Stylus_XL

      Considering how quickly popular social media platforms have been repeatedly ditched in favour of newer fad alternatives over the years, $19bn on WhatsApp is a colossal gamble. That kind of money shows that Facebook is betting on WhatsApp being popular for decades to come, which is bordering on insane.

      • Leif Sikorski

        In my opinion they just try everything to get the young people who run away from Facebook. First Instagram, now Whatsapp. The biggest problem for them will be that this won't help to get them back to Facebook. I highly doubt that their strategy will work in the long term and now they've the same mess Google had years before - 3 different messaging services (FB Messenger, WhatsApp, Instagram Direct).

    • Guest

      I have no intention of ditching SMS, I get free unlimited, no idea why it's popular at all in the US where just about every plan has free unlimited SMS built in now.

      • frafri

        mostly inside of the U.S .. not outside...
        outisde we pay outrageous prices for SMS
        So people ask you for your whatsapp.. not your phone number.

        • Régis Knechtel

          Exactly!

        • Leonardo Farage Freitas

          But, isn't whatsapp and phone number the same thing? Can you find someone on whatsapp by any other identification?

          Anyway, I can confirm that in Brazil SMS has very good plans. I've got unlimited SMS for a fee (R$29, if I'm not mistaken)..

          But anyway, paying $0 is better than paying $0,01. I think this is why everyone is ditching SMS..

          Making my reply clear: Whatsapp is better than SMS because is totally free (ignoring the fact that you've got to have an internet connection to use)

          • frafri

            Leonardo , you are right they are the same but when someone asks for your whatsapp you know its not intended to be an SMS . some carriers charge for SMS sent and received. !! crazy I know .

          • Leonardo Farage Freitas

            Once I spent sometime in the US and bought a simcard from SPRINT. They would charge me for made and received calls, this is crazy indeed. It was back in 2006..

            But anyway, I just ranted about whatsapp and phone number because once you gave your phone number, there is nothing preventing the person from sending you a SMS.

          • frafri

            you are right. but I know a lot of people that BLOCK SMS so they don't get charge. or get pushed into horoscope services or whatever.. you know?
            that happen to me once. I sent a text message and it subscribed me to some wicked stuff. ended up paying.

            anyways it would be good to add facebook status to whatsapp if thats how the want to implement it.

          • Leonardo Farage Freitas

            It does make a lot more sense now, never thought about blocking messages.

            Well, I do hope facebook can keep it as is or add better functionality :D

      • Elemetrix

        I have unlimited sms. It's terrible compared to a decent messenger. Like using a fax instead of email, it's just horribly out of date.

        A big draw for me is sms is network dependant. WhatsApp can work on wifi. Especially useful when travelling. Much better at sharing files too. Plus group chats work properly.

        For me sms just isn't comparable these days.

        • _artem_

          I live in Germany (was actually born in Russia) and have lots of friends in Russia and Ukraine. I pay 10 euros per month for unlimited mobile internet connection on my phone, that internet pack includes 50 free sms for national mobile networks (Germany) and USA. I can't send free sms to Russia or Ukraine. I can't even send a Cyrillic sms using this 50 free sms... all the Cyrillic letters are send as "???". Also those 50 free sms are working only over internet, and my provider is to stupid to get utf-8 working so I'm able to send free sms in non Latin letters. Whatsapp and viber just let me type in whatever language I want and that's for free (I just pay 10 euros a month and have unlimited data plan), viber also lets me call my friends for free (over the internet) in any country, call every of my contacts who has mobile data on. You in the USA even have only one keyboard layout printed on your keyboard, every country with Cyrillic writing has Cyrillic letters along with standard Latin letters. So you can type absolutely any one in English and you expect that this person gonna understand you. I just want to be able to send texts in my native language which my operator doesn't allow me to. Another idiotic shit is when I send a normal sms (not that free which is included in my days plan), 1 sms can be 160something Latin letters long, when I try to use Cyrillic letters 1 sms is limited just to 30-60 letters. Even if I send it to a national number (German number).
          So services like whatsapp or viber are the only adequate options to contact your friends, relatives who live in another (with non Latin alphabet) country

      • deltatux

        The draw for these messaging services is global reach and group messaging. That's the only reason why I use them. I use SMS primarily because I know it works and I don't need to turn on data for it. Its drawback is poor picture messaging and not everyone has global texting plans. I personally use Hangouts and BBM for these. I've already started weening off WhatsApp, this is just the nail in the coffin for me.

      • frafri

        SMS it is kind of slow. Whatsapp is faster. it works through wifi.
        the message goes through the internet. not through your carrier's tower. :)

        "But you see, here in America the attitude that is fed to us is that outside of America there live lesser people. "Fuck them, let them fend for themselves." No, Fuck you, they are you. No matter how much you want to dye your hair blonde and put fake eyes in, or follow an anorexic standard of beauty, or no matter how many diamonds you buy from people who exploit your own brutally to get them, no matter what kind of car you drive or what kind of fancy clothes you put on, you will never be them. They're always gonna look at you as nothing but a little monkey. I'd rather be proud of what I am, rather than desperately trying to be something I'm really not, just to fit in. And whether we want to accept it or not, that's what this culture or lack of culture is feeding us."

        poverty of philosophy - Immortal Technique

      • _artem_

        US? Is it that country where police kills 17 yo kids just for having a Wii u controller in their hand?

    • JH

      Of they just wanted lots of Whatsapp data to plump out Facebook's advertising power...

      • laxjosh

        Ding! Ding!

        Facebook will match phone numbers between Whatsapp users and Facebook users, mine the data (your conversations and phone book) for your connections (recommend friends on Facebook) and for your interests for advertising.

        You'll be having a convo among friends on Whatsapp about what restaurant to go to, and you'll suddenly get ads for restaurants on Facebook.

        So, while $19 billion sounds high for $450 million in annual revenue, FB is undoubtedly banking on monetizing the data for advertising purposes.

        If my extended family wasn't still on Facebook, I would dump it all together.

        ...............................

        Just a shame that Google didn't seriously build out Google Talk when it had the chance. If they put the resources into Google Talk that they should have, Google would own the IM market right now. Instead, we have a gazillion different apps/services with no standard across them. Heck, even Google still have Hangouts and Google Voice alongside each other.

        • deltatux

          This would apply the same with Hangouts and Google. Don't forget, like Facebook, Google is also an ad clearing house.

          • laxjosh

            Oh, agree completely. Just helping to justify the $19 billion price tag. They are betting big on advertising. We'll see if it pays off for them. I have my doubts about Facebook over the next 10-20 years.

  • Raymond Berger

    Come on Google Voice integration!

  • Adam B.

    Wasn't Whatsapp sold for 16B$ ? Not 19B$

    • Ricardo Kummel

      16 for the company, 3 for the employees (stock options).

  • Ricardo Kummel

    No other app leverages our contacts like WhatsApp. And I'm not keen on sharing everything with Facebook, specially my phone number. Also, I have two Facebook accounts (personal and professional) that are completely separate from each other and each with its own email address and different names, so, I would prefer to stay like this. If I have to integrate my Facebook with WhatsApp than I'll be ditching the app.

    • Dmitri Smirnov

      Don't worry, you won't have to do anything, they'll do that for you (and you can be sure, that the first thing Facebook did was sucking out a sweet-sweet social graph with real phone numbers and connections, they've been trying to get their sweaty hands on users' phonebooks for a long-long time).

      • dora

        Don't lie to yourself, idiot droid fan! lag has been a lie since 2.3, right?
        but why did samsung create the Exynos Octa to fight the lag? Answer me now, brainless fan!

        • usaff22

          The term is iDiot, and the definition is what you are right at this moment.

          Go home.

      • dora

        Google is devil. they don't care about lag in android. i feel sorry for
        android losers lolz.

        • squiddy20

          Too bad the guy didn't even mention lag... Troll harder.

    • dora

      Keep dreaming that lag is a lie! oh, wait
      another 5 year, let fucksung releases 1024 core to reduce lag in ur
      android.

      • usaff22

        You could be a little less obvious about your trollling, you know.

        • dora

          F*** samsheep! U r brainless! Ok, i will let u
          enjoy LAG in android 4ever! :(

          • taz89

            If you do the mind me asking what do you get out of this random commenting. This article has nothing to do with Android or lag so why bring it up. Also clearly your no fan of Android or Google so why waste your time on anything to do with it. Surely you have something g better to do than this

          • SSDROiD

            Don't feed the troll! He's obviously just looking to burn off some time by raging in here about completely irrelevant matters.

          • taz89

            I know, I just sometimes want to understand why. I just don't get why you would want to do this

          • SSDROiD

            Attention, and to make people rage. They get a kick out of it. Especially when they have nothing else to do. I could easily imagine this guy being a 12-year-old in school trying to impress his friends by trolling here, so the best thing to do is just to avoid them (OK, downvoting them is alright, but you should always try to avoid commenting), because that won't make it fun for them :)

          • Serge Cebrian

            /morningtrollfightmode ON

            Go and take your apples away Troll..
            Tell me how apple or Nokia are not lagged.

            /morningtrollfightmode OFf

          • danishdhanshe

            Umm... Dude!
            These bots rarely read replies!
            It's useless replying to them!
            Just don't reply and wait for their comment to get deleted so that the contents section is clean!

        • Mario

          Or at least be smart enough to troll in the right article. It's way off somewhere in left field. I think it's rather funny. lol.

    • dora

      Google is devil. they don't care about lag in android. i feel sorry for
      android losers lolz

      • yankeesusa

        Ok. Thank you for your opinion. I guess I'll just ditch my non laggy note 2 for an iphone! Ha!

    • dora

      It's all about shamesung's quality. Nokia and
      others also have 3rd party Accessory, why didn't they have any problem?
      that's obvious, shamesung!!!

      • Guest

        Bad troll, go back under your bridge.

        • dora

          Here comes another paid troll from the f***** samsung! U r too blind to see the fact that lag DOES exist in andorid :(

      • usaff22

        There are other Android manufacturers other than Samsung, you know. iDiot

        • dora

          the cheapest plastic is for shamesung fans!!!!

    • BarKa

      I already started search for alternatives. BBM is an option as of now. fb buys anything means end of privacy. Good bye WhatsApp

    • Xyriin

      It's more a question of when than if. And of course I expect ads to arrive like they did on Instagram. I'm looking into Telegram now, apparently has over 5 million installs so far and also offers end to end encryption.

      • _artem_

        Telegram is made by Pavel Durov, the "founder" of Russian Facebook clone vkontakte. It's a trap dude. You are either spied by US Facebook or by RU Facebook (vkontakte)

    • Sigmund

      I'm simply moving to Telegram and encouraging my contacts to do that. I will not let Facebook have my phonebook never, for the privacy.

    • Jaimin

      The people i mean your friend's phonebook must have your number. It would be useless to take care.

  • Tiago Pestana

    Never used WhatsApp LOL

    • Paul Taylor

      Thanks for letting us know that. 😐

      • frafri

        A lot of people that live in the U.S don't really know what Whatsapp is... The only reason why whatsapp is really popular is because a lot of carries failed to deliver unlimited SMS packages.. :) Specially in SouthAmerica..

        • Mozaik

          You know there is a whole world besides US , the main reason whatsapp is famous for due to its multiplatform support at 1$ per year and my favorite feature is that it has no ads.

          • frafri

            I agree, but a lot of students or just regular people DO NOT have unlimited SMS packages. Although they do have WIFI at school and other places. Which makes it very convinient.
            Back in Chile, Southamerica . People do not ask for your number.

            They say

            "wasapear" which means to send a whatsapp.

            So they just ask you for your whatsapp.

            They will never text you. :P

          • abobobilly

            And not just that ... it supports a HUMONGOUS list of devices including those olden olden OLDEN "Symbian" phones. I mean, COMON. That is seriously impressive.

          • folkrav

            Support for devices is nothing if there is no market. The number one reason it is so popular outside US/Canada is mainly because of the lack of unlimited SMS plans. Here in Canada, even the cheapest prepaid plan I can find includes unlimited SMS... But data is expensive for consumers. An incredibly high part of the consumers don't even have data (I was a sales rep for one of the major providers in Canada for over 2 years, I could see it!)

      • Tiago Pestana

        Thanks for letting us know that you now know that i dont use it

    • dora

      No one like the ugilisest plastic body from samsung. R u living in a
      stoneage?

  • MG

    Whatsapp had nothing than Google needed from a technical aspect. Hangouts is already WAY better...

    The only thing that they would have been buying is the brand and userbase. That's not worth 16bn...

    • Dmitri Smirnov

      Well, whatsapp didn't force users to jump on the Google+ bandwagon, that was a plus.
      Not that facebook is going to be any better.

      Damn, sometimes I wish there was a law, that would force all these greedy proprietary messenger operators to open up an inter-server collaboration (you know, like XMPP initially intended, but they (Google, Facebook, WhatsApp) all enjoy the benefits of an open protocol client-to-server, but due to a wet dream of one day dominating the mobile messaging market won't let users talk to each other.

      For this damn reason I'm forced to keep all these messengers on my phone, cursing and swearing every time I have to switch or keep these little battery hogs running.

      • Mik

        Nor did Google, despite what the plebs in the press say, all you needed was a Google login that used a REAL NAME. Nobody forced anyone to use Google+ off the back of that.

        Still some people are easily fooled.

        • Dmitri Smirnov

          Please enlighten me: how to add users to Hangouts not touching G+? Big G forces people to use G+, deal with it. Take a look at what happened to the Gallery app on Google Devices, G+ sucked that right up.

          Wonder if Facebook will try to do the same with WhatsApp or will try to keep integration more subtle?

          • Dr P Fenderson

            You are misinformed. I Hangout with contacts daily that have Gmail accounts, and that's all. When you go to start a chat, it literally asks "Name (G+), Email, Number or Circle (G+)". If you notice, 2 of the 4 require G+.

            Even then, G+ is just that - your Google services+. There does not really seem to be any reason that so many people are experiencing such animosity over the issue. It's a service upgrade. If you don't want to participate in the social aspect of it, you don't have to. Turn off notifications and go about your business.

          • Ricardo Neves

            Exactly, people seem to think G+ is just another social network when it's so much more than that. Its similar to a Microsoft Account or an Apple ID. It just so happens to have a social network built in, that can you choose to ignore. Only thing different from a GMail account is having a real name instead of an handle.

      • deltatux

        WhatsApp does use a modified XMPP protocol and Google Talk was pure XMPP until Hangouts came out.

        • Dmitri Smirnov

          In case you didn't catch my rant - it's exactly that pisses me off. WhatsApp even uses modified ejabberd server, but they intentionally prevent their server from talking to other servers.

          Just imagine what a beatiful world it would be, where WhatsApp user could easily write to Facebook user, and they all could talk to Hangout users, now that would be SMS replacement, not this nightmare of fragmented IM systems. Heck, I still remember this kind of nightmare on desktops, ICQ, AOL, MSN, Odigo, every one of them dreaming to be the one IM.

          Thanks to this we're still stuck with email as universal communication media (and protocols are outright scary, dated and surrounded with all kinds of hacks to help fight spam, add some encryption between some servers and other things that were not considered, when SMTP was implemented)

      • Dominic Powell

        When will people realize that Google+ is just a glorified gmail account that has a million more features that are all optional to use. Its not something that should frighten anyone.

      • skyrim9

        I'm always asking this myself: Why neither Google nor Facebook create apps that clone WhatsApp functionality ?

        I mean, creating a multi-platform messenger with that 16 billion won't be that hard, right ? Instead of buying WhatsApp, why didn't Google or FB create an app that exactly offers similar feature of WhatsApp ?

        Probably the hardest thing for them is.. ...to keep their own social network separate from messenger..

        • Ricardo Neves

          Brand recognition i guess. People associate Facebook and Google with social networks, and they just want a simple SMS replacement app that only uses their number.

    • falter

      In the UK here... almost all of my friends use whatsapp, and I don't know anyone who uses hangouts

  • Ahmed Eid

    Great

  • h4m

    Why not use a messenger, that offers free phone calls on top of free messaging? For example Line.

  • samosa legend

    To be honest, I would've felt more comfortable if Google bought WhatsApp but Facebook on the other hand...

  • turdbogls

    this is just crazy, It would have been awesome for google to get Whatsapp i guess simply for the user base....however, I dont know a single person i communicate with on a semi constant basis that uses whatsapp. pretty much everyone i know uses android and already has Hangouts on the device...no one knows what it does (somehow) but after i explain it to them, they jump on it and are LOVING it.
    again, would have been cool to have that userbase, but not 16 or 19 billion cool.

    • Steve B

      Yeah, I don't know a single person who actually uses Whatsapp. Maybe it's popular in third world countries?

      Hangouts is pretty damn good as-is and is only getting better. In the next month or two we should finally get our long awaited Hangouts/Voice integration and once that happens it will be hard to compete against it.

      • Régis Knechtel

        Whatsapp is the most popular messenger in Brazil. I think that's because whatsapp is very light and fast on mid/low end phones.

      • Stylus_XL

        I'm from the UK and it's extremely popular here. Most of my phone contacts use it. Since around 2011 it's dramatically lowered my SMS usage, which I generally only use now when texting older relatives, conducting business transactions or as an alternative when I can't get a data connection.

        Conversely, I have only two contacts who use Hangouts - both due to me specifically telling them to.

        • falter

          another UK user here... nobody knows what hangouts is (unless they got a nexus5 and even then nobody uses group sms) - but almost all of my contacts know and use whatsapp. Whatsapp is easy to use, has no ads, and is free for the first year I think. It's great for sending/sharing images and talking to groups of people.

          Most importantly, it's easier to use than hangouts

          • yankeesusa

            I understand the popularity thing but the ad thing will probably go away now that facbook has it and hangouts doesn't have ads either. Also, how is it easier than hangouts. All you do it type and send with both messaging apps. The advantage with hangouts is you can continue the conversation on your computer, tablet or even an ipad. Its all linked. And you can group friends together or have just 1 and select video very easily. Don't know how much easier that could be.

          • Ricardo Neves

            It's easier in the sense that you don't need to register an account, just input yout phone number and you're golden. Registering an account on Google is not hard, but for some reason people have some kind of alergy to G+.

          • yankeesusa

            I did not know that. That does seem easier in that sense.

      • hallohallo

        If just about any other country then USA is a third world country you're right. Nice cliche.

      • frafri

        Third world countries . Like Brazil and Chile ;) ? lol
        whatsapp is just killing it. WhatsApp - a popular mobile instant messaging application. If you want to send somebody a message via WhatsApp you will need to ‘wasapear’ them, and if you want to talk about one such message you will be discussing a ‘wasap’ (plural ‘wasaps).

  • Aidren

    I already switched to Telegram... way better than WhatsApp and absolutely free :)
    https://telegram.org/

    • SSDROiD

      That comment basically has "Sponsored Post" written all over it! :P haha

    • Magnus Dahl Hegge

      Long time KiK user here. Pretty much the same as whats app but free. Also quite handy with the sent/delivered/read status.

  • Matthew Fry

    So... isn't this considered an unethical business practice?

    • https://play.google.com/store/apps/developer?id=iWizard Bikram Agarwal

      Shhhh.... don't wake up the Google worshipers.

  • http://www.facebook.com/tony.damiani.pr Tony Damiani

    WhatsApp its very popular in Latin America Countries including the Caribbean. I hope FB doesn't F*** it up! -_-

  • Sir_Brizz

    Well good on them for holding out, I guess. But not selling to Google and instead selling to Facebook? LOL. We will give up our morals... for a price.

  • GraveUypo

    the reason i used whatsapp was because, aside from being a very good messenger, it didn't belong to any of the big four "data-greedy" companies. if ANY of them bought it, i'd be jumping ship.

  • Lamm

    The magic in whatsapp is the simplicity. Much Like ICQ back in the 90', it a allows for simple exchange of text messages, some basic emoticon usage.

    But in my opinion what made it so popular is the fact that it allows people to send photos, audio, video, contacts and location with just a few clicks (or touchs).

    It's simple, and it works. Much unlike any other bloated messenger out there.

    IF facebook keeps it the way it is, then I see no problem with the aquisition, but if I start seeing updates with the app`s size incresing to 20-30-40 mb, I'll know some thing is going on.

    I honestly hope the don't do a microsoft and destroy the app (*looks at skype*).

  • folkrav

    Is Canada really that different? Here, Hangouts is close to non-existent, and the only time I used Whatsapp is when my ex-employer switched from Blackberry to Android before BBM for Android was out, and had to replace BBM for communications between stores managers/employees. I don't know anyone who uses either solution, and BBM stopped being popular. Most teenagers here, from what I can see (I have a teenage sister), uses Facebook Messenger.

  • Anthrox

    its funny but in Australia i don't know anyone that really uses this i guess its due to SMS not being a massive problem where we pretty much get unlimited SMS as part of our contracts

    Google didn't really want them they where just driving the price up imo Hangout is nearly 1 year old it can do so much and i expect to see great new feature added this year and maybe even a clean up of the gui

  • Jos

    simply because Facebook turned down Brian Acton's for job in 2009.

  • BarKa

    try Threema... awesome replacement.

  • John charitos

    I don't know why you guys saying anything about privacy for whatsapp. All i got was full of spam messages through it through random numbers that i had no way of stopping . Each time i blocked one another message was sent from someone else. Ended up unistalling but other wise was a nice messaging up.

  • emanuele santos

    ok sorry i dont k now if u speak english? its ok for me and facebook you have bbm or watsapp?

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