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Monday, October 12, 2015

Facebook now officially owns WhatsApp

By Ellis Hamburger on October 6, 2014 10:20 am

Eight months after announcing its intent to acquire messaging giant WhatsApp, the deal has finally gone through. Facebook announced the closing of the deal with the SEC in the United States, and with the European Commission in Europe. Since the deal was announced for $19 billion, its price tag has actually increased to a whopping $21.8 billion. This is in part due to Facebook's rising stock price over the last several months, Recode points out.

As WhatsApp officially joins the Facebook fold, WhatsApp founder Jan Koum has joined Facebook's board. He will also be paid just $1 per year like Facebook CEO Mark Zuckerberg, according to filings, but has been given a very hefty purse of Facebook shares to hold on to. Facebook now has the right to do whatever it wants with WhatsApp, though the company likely won't make any dramatic changes to the service for a long while. Facebook has pledged to operate its latest acquisitions, from Instagram to Oculus, largely independently — seeing as these companies were already doing so well on their own. For example, don't expect WhatsApp to abandon its $1 / year business model or add advertisements any time soon.

"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," Koum said when the deal news broke months ago. Facebook does, however, plan to its new businesses to achieving larger scale, according to Facebook. Like Mark Zuckeberg said on a recent earnings call, it's all about ramping up Instagram, Oculus, and now WhatsApp to reaching one billion users. So why mess with something that isn't broke?