Facebook wins FTC approval of WhatsApp acquisition

Technology -

Facebook in February 2014 announced plans to acquire popular mobile messaging app WhatsApp for a combined total of $19 billion.

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Source: www.flickr.com

The Federal Trade Commission on April 10 approved Facebook's proposed $19 billion acquisition of WhatsApp. (The deal must still be approved by regulators outside the U.S. to officially close). Facebook said it was "pleased" the FTC approved the acquisition.

Facebook has said that it expects the acquisition of WhatsApp to close by August 2014.

"We want to make clear that, regardless of the acquisition, WhatsApp must continue to honor [its privacy promises] to consumers." FTC letter to Facebook

The FTC told both Facebook and WhatsApp that they must notify consumers of any major changes to their privacy policies lest they face regulatory action.

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.

Jan Koum, the co-founder and CEO of WhatsApp, said March 17 that his company's privacy policies will not change as a result of its acquisition by Facebook. Koum and WhatsApp had been under pressure to clarify exactly how -- if at all -- the Facebook acquisition would change how WhatsApp treats user data.

"I was born in Ukraine, and grew up in the USSR during the 1980s… The fact that we couldn't speak freely without the fear that our communications would be monitored by KGB is in part why we moved to the United States when I was a teenager." Jan Koum, WhatsApp CEO

Koum said that the Facebook acquisition "will not compromise the vision" that made WhatsApp so successful in the first place, noting that the company prides itself in knowing as little as possible about its users.

Telegram, a messaging app that emphasizes privacy and security, was downloaded 8 million times after Facebook announced that it would acquire WhatsApp.

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.

"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

Zuckerberg said on the conference call announcing the proposed acquisition that WhatsApp "doesn't get as much attention in the US as it deserves" because most of its growth thus far has occurred overseas. Zuckerberg said the first talks between Facebook and WhatsApp occurred on Feb. 9.

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. Copyright 2014 Reuters

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

WhatsApp, which had 32 engineers at the time of the acquisition announcement, said it will not introduce advertising and will continue as a fee-based service. Koum will join Facebook's board of directors as part of the deal.

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. Copyright 2014 Reuters

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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