Tuesday 21 November 2017

Facebook's WhatsApp price tag stuns markets but could bring investment here

Whatsapp (stock photo)
Adrian Weckler

Adrian Weckler

Facebook's €14bn acquisition of private messaging service WhatsApp could see the social network's Dublin office become involved in overseeing some Whatsapp functions.

The deal, which is the largest technology industry acquisition in the last decade, could see Facebook's Irish office tasked with functions including legal oversight, marketing and reporting tools.

Facebook's Irish operation has grown to 600 people with the company recently extending its workspace to accommodate 1,000 people.

The social network runs several functions from Ireland, the biggest of which includes 'user operations', sales and marketing.

About 100 people are currently involved in overseeing the development and implementation of technology to identify inappropriate content such as bullying and abusive material.

The Irish office has also been attributed with developing successful ad products that can be transferred to other parts of Facebook's business.

A spokesman for Facebook declined to comment on the company's plans for Whatsapp.

While some economists have sought to portray the deal as the latest sign of a tech bubble, tech analysts say that the acquisition is proportionately similar to other prominent tech deals.

"(Facebook) paid first 1pc of its market value for Instagram and now close to 10pc for WhatsApp," said Ben Evans, a mobile industry analyst who works for venture capital firm Andreessen Horowitz.

"That's the right way to think about value, I think. The deal values WhatsApp users at $35 each, very close to what Google paid for YouTube." Facebook chief executive Mark Zuckerberg said that WhatsApp currently processes the same number of messages as global SMS messaging providers. WhatsApp users currently send approximately 18 billion messages daily. The service also processes 500 million photo messages daily.

The company's original investor, venture capital firm Sequioa Capital, is estimated to have made close to €3bn in the transaction. In 2011, the funder invested €6m in the messaging service.

The $19bn (€13.8bn) Whatsapp acquisition is comprised of $4bn in cash and $12bn in Facebook shares with a further $3bn reserved in restricted shares for Whatsapp staff in coming years.

Whatsapp has 450 million monthly active users and 320 million daily users. Its rivals include Skype, Viber, Snapchat and Apple's iMessage. WhatsApp has just 55 employees and has not spent any money on marketing or advertising.

Irish Independent

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