Facebook's proposed acquisition of WhatsApp is now drawing close scrutiny from privacy advocates.
The Electronic Privacy Information Center and the Center for Digital Democracy asked the Federal Trade Commission March 6 to investigate Facebook's proposed acquisition of WhatsApp over concerns that the deal will "violate WhatsApp users' understanding" of how their data will ultimately be used.
"The millions of WhatsApp users who signed up for the service were promised… that the company didn't want to gather and commercialize their data. They posed as the 'unFacebook,' deriding the commercial surveillance apparatus that lies at the core of contemporary online practices." Center for Digital Democracy
Telegram, a messaging app that emphasizes privacy and security, was downloaded 8 million times after Facebook announced that it would acquire WhatsApp.
Facebook announced Feb. 19 that it will purchase mobile messaging app WhatsApp for a total of $16 billion ($12 billion in stock and $4 billion cash), plus an additional $3 billion in restricted stock units for WhatsApp's founders and employees.
In a conference call held after the deal was announced, Facebook said it was confident it would obtain the necessary regulatory approval, and that the deal would close sometime in 2014. Facebook has agreed to pay WhatsApp $1 billion if the deal is not approved.
"WhatsApp had every option in the world, so I'm thrilled that they chose to work with us. I'm looking forward to what Facebook and WhatsApp can do together, and to developing great new mobile services that give people even more options for connecting." Mark Zuckerberg, Facebook founder and CEO
The sole institutional investor in WhatsApp, Sequoia Capital, may receive as much as $3 billion from the deal, after investing $60 million in the company over three rounds, according to the Wall Street Journal and CNN Money.
Speaking during the opening keynote address of Mobile World Congress 2014, Mark Zuckerberg said WhatsApp is "worth more than $19 billion" and called the proposed acquisition "quite a good bet" for the company. Zuckerberg added that Facebook was "probably done for a while" with acquisitions.
WhatsApp, which is available for most major smartphone platforms, lets users send messages to each other using a data connection, which in some markets is less expensive than sending a traditional SMS text message.
WhatsApp was first released in 2009 and currently has 465 million monthly active users. Mark Zuckerberg repeatedly said on the Feb. 19 conference call that he believes WhatsApp will quickly grow to 1 billion monthly active users.
"WhatsApp will remain autonomous and operate independently… There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product." Jan Koum, WhatsApp CEO
Google on Feb. 26 denied ever having made a bid for WhatsApp, with Android chief Sundar Pichai saying during the Mobile World Congress in Barcelona that press reports to the contrary "are simply untrue." Fortune reported Feb. 20 that Google had offered as much as $10 billion for WhatsApp.
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