Facebook Looking to Buy Whatsapp?

Andrew Klips  |

Leading tech website Techcrunch.com reported on Sunday that Facebook (FB) is in talks with Santa Clara, California-based WhatsApp about a possible acquisition of the ad-free mobile messaging application by the social network giant.  The depth and details of the discussions are not known, according to Techcrunch, as it digs deeper after getting the initial story from “sources close to the matter.”

A paid, cross-platform application, WhatsApp utilizes a user’s existing Internet data plan to allow the exchange of messages without paying charges associated with SMS.  WhatsApp currently charges 99 cents for its app (although the first year can be downloaded for free at Google Play, then $0.99 per year after).  Available for all the major manufacturers, it’s a hot-selling app; listed as #2 at the Apple Store and the number one free app for Android phones with between 100 million and 500 million installs.  WhatsApp was founded in 2009 and said in October 2011 that it has more than 100 million active daily users receiving more than 1 billion messages per day.

“That is 11,574 messages a second,” WhatsApp said with the milestone.

Menlo Park, California-based Facebook apparently wants to add those users to its own platform.

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Facebook, which reached 1 billion users in October, has been scrutinized for flooding users with advertisements to generate revenue.  The ad-free Whatsapp would be a logical acquisition to bolster its own network, generate revenue and expand its offerings.  Facebook chief executive Mark Zuckerberg has previously stated that greater penetration of the mobile and emerging markets are critical to corporate growth.  WhatsApp certainly has a mobile footprint and reportedly has a presence in 240 countries presently.

To play “devil’s advocate,” the WhatsApp Messenger has been criticized over the past 18 months for security risks allowing hackers access to databases.  According to information from The H Security posted on Saturday, WhatsApp has “not actually secured the system, at least for Android users,” reporting that user’s accounts can still be hijacked and used unnoticed.  Ironically, The H recommends that readers uses other applications – such as Facebook, for one – until WhatsApp fixes some issues.

Even with the buyout rumors, there is a possibility that WhatsApp itself could be resistant to being acquired.  WhatsApp co-founder Jan Koum tweeted earlier this year that “people starting companies for a quick sales are a disgrace to [silicon] valley…”

Reports from several websites reaching-out to Facebook or WhatsApp have received no comment from either company up to this moment.

Shares of Facebook have been storming higher since hitting $18.87 on November 12 on the back of analyst upgrades, new advertising programs and the launch of its “Gift” platform as Wall Street apparently finding some confidence that the social media company can figure-out a way to make money.

Shares closed at $28 each on Friday, their highest level since July 25, although still well below the $38 price tag for their highly-touted initial public offering in May.

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