By Alok Saboo on April 6th, 2013
Rumors have it that Google is negotiating a $1 billion acquisition of WhatsApp. WhatsApp is a cross-platform mobile messaging app that allows users to send messages to other users without having to pay for SMS and incurring other charges (only data charges apply). In addition to basic messaging, WhatsApp supports group text messaging and multimedia messages (audio and video). Despite the number of mobile messaging apps (Viber, Kik, Textme, Heywire, Talk.to, WeChat, Bobsled, ChatON, TextPlus, GroupMe, Line Messenger, Nimbuzz, Textie, Kakao Talk, Hike, TextFree, etc.), WhatsApp has emerged as the leading mobile messaging app with over 100 million users on Google Play store alone and has been the top overall paid app on the App Store.
Given the recent speculation that Google is working on its own messaging app, Babel, this news may come as a surprise. However, there are several reasons why this makes sense. Like any social network, the value derived by users increases as the number of users on the platform increases. As any of the other messaging apps will testify, building a large user base is a tough proposition. Even if Google introduces its own messaging app, there is little incentive for users to start using it immediately. Although WhatsApp does not report the number of users, it has anywhere between 200 and 350 million users around the world. This compares well to around 350 million Google+ users. WhatsApp tweeted in January that it hit a new daily record of 18 billion messages sent and received in a day. That is up from 10 billion messages per day in August, highlighting its rapid growth.
On Dec 31st we had a new record day: 7B msgs inbound, 11B msgs outbound = 18 billion total messages processed in one day! Happy 2013!!!
— WhatsApp Inc. (@WhatsApp) January 2, 2013
Google can start with this huge user base and take the service to the next level and meaningfully compete with Facebook. Besides the user base, WhatsApp has the technology with its app available across all the major platforms, including iOS, Android, BlackBerry, Symbian, and Windows Phone, giving Google instant access to users across all these platforms.
WhatsApp and its users will also benefit from this acquisition. Although WhatsApp is the leading app in this space, many of its rivals are gaining ground (see chart below). An acquisition by Google and integration into Android and other Google products will firmly establish WhatsApp as the number one app in the mobile messaging space.
The mobile messaging space is ripe for consolidation (there are just too many apps) and what better target than WhatsApp.