Facebook’s WhatsApp Deal Could Jumpstart Internet.org Plans
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Mark Zuckerberg took a step closer to realizing a dream to bring the Internet to everyone on the planet with Facebook’s $19 billion acquisition of mobile messaging service WhatsApp on Wednesday.
Over a dinner conversation with WhatsApp CEO Jan Koum earlier this month, Zuckerberg sketched out some of his plans for how the two companies could work together, according to people familiar with the matter. One of Zuckerberg’s biggest selling points: How WhatsApp could accelerate the work of Internet.org, Zuckerberg’s project to bring the Internet to all the world’s seven billion people.
Next week, Koum will join Zuckerberg on stage at the annual Mobile World Congress trade show in Barcelona, Spain, to discuss, among other things, how the two will unite to push the Internet.org project forward, according to sources.
First announced late last year, Internet.org is a joint initiative among Facebook, telecommunications carriers and mobile hardware makers to lower the cost of connecting to the Web via mobile devices, so that the billions of people in the developing world can gain access to basic services and pleasantries the Internet affords — including Facebook, of course. Spearheaded by Zuckerberg, the project includes cooperation from partners such as Ericsson, Samsung, Nokia and Qualcomm.
“The unfair economic reality is that those already on Facebook have way more money than the rest of the world combined, so it may not actually be proﬁtable for us to serve the next few billion people for a very long time, if ever,” Zuckerberg said in a white paper he published when announcing the initiative last year. “But we believe everyone deserves to be connected.”
For years, Koum had strongly resisted selling his company to a number of the Valley’s largest suitors, continually rebuffing interest from Google and Facebook. Koum and co-founder Brian Acton have always been fiercely independent, wanting to maintain control of WhatsApp in order to shape it into their vision of the company it has become.
During recent negotiations, however, Zuckerberg made quite a few concessions that would allow WhatsApp to maintain its independence as a stand-alone company. That included keeping WhatsApp’s current headquarters in Mountain View, Calif., retaining the WhatsApp branding, allowing it to operate independently under Facebook’s umbrella and doling out a Facebook board seat to Koum. Facebook’s $19 billion offer did not hurt either.
But beyond the big ticket price and clear strategic value, Koum’s and Zuckerberg’s powerful, shared desire to connect the rest of the developing world to the Web helped align the two companies’ goals, sources told Re/code.
The details of exactly what role Koum’s company will play in Internet.org’s plans are unclear. But the value of WhatsApp to Facebook’s plans are apparent: WhatsApp has risen in popularity over the past few years for being a lightweight text, voice and video messaging option that works across most smartphones and many feature phones. That includes Android, Nokia’s Asha phone series and the Symbian OS — all of which are ubiquitous, low-cost and highly popular in developing nations.
Unlike traditional SMS text services, WhatsApp relies on a mobile subscriber’s data connection to send and receive messages between users. This bypasses the often expensive SMS plans that carriers outside of the United States offer to subscribers, which has made WhatsApp one of the fastest growing mobile apps available today. The app has nearly half a billion regular users, more than 70 percent of whom use the app on a daily basis.
Over time, Facebook will need to persuade international carriers to bundle their apps on newly sold phones — much as Twitter and Foursquare are already doing — or enact more deals that allow for free Facebook or WhatsApp use when using a certain cellphone plan or buying a certain phone.
Zuckerberg’s other big challenges with Internet.org include persuading carriers to cut the cost of data access for regular people, and reducing the amount of data that apps need to operate smoothly. With Facebook’s purchase of app analytics and optimization company Onavo late last year, the latter is already under way. The former will likely take much, much longer.
With WhatsApp, Zuckerberg acquires another vital piece to fulfilling Internet.org’s mission.