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.
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