Facebook just paid a king's ransom for an app many of us have probably never heard of. WhatsApp is a phone-number-focused messaging app that has been a word-of-mouth success of enormous proportions outside the United States, particularly the southern hemisphere with a global user base approaching half a billion people, dominated by the young.
To me the acquisition is reminiscent of AOL buying ICQ so many years ago. But what is Facebook really buying? The $19 billion deal is not really securing technology; rather, it's centralizing the large user base of the app, at around $40 per user, to add its social graph into Facebook's universe. The company is buying users, not technology.
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As I explained last week, none of this would have been possible without open source software. Both Facebook and WhatsApp are built with open source platforms and tools (WhatsApp is built on the FreeBSD kernel, for example). But neither company would leap to mind as "an open source company." This is how open source builds value today -- not by being the headline, but by being the heart.
What about the customers? WhatsApp had a reputation for being edgy and counter-corporate, with pledges against advertising and abuse of personal data. While both can be expected to stick strictly to their published terms, the commitment to user rights in this deal is likely to be secondary. We can expect both to share user information once they are under a common banner, adding a wealth of phone data to Facebook and fleshing out WhatsApp with both Facebook's data and the results of Facebook's powerful semantic search.