At $19 bn, it was a mammoth price to pay for WhatApp, but what may be forcing Facebook's hand is a 'decrease in daily users', which the company itself accepted while posting its earning results. This was definitely unusual for a social media website that repeatedly topped the charts as a favorite hangout network.
Piper Jaffray's semi-annual report 'Taking Stock with Teens' confirming the trend, in December last year. Within a year, its popularity had plunged from 46 per cent to exactly half at 23 per cent.
The problem was not with Facebook features or the app, but chat. Facebook users find its chat a bit boring and outdated. The biggest problem with the chat was that instead of engaging users more in the first place it encouraged them to exit.
It is no secret Facebook has been losing popularity among teenagers. It's been looking for a way to win them back and to reach hundreds of millions of additional users around the world. One analyst recently estimated that more than 11 million young people have left Facebook since 2011.
Young users realize they dont need to remain loyal to one platform especially one that has become the equivalent of the family dinner table. Many of them maintain Facebook accounts to stay in touch with family, but prefer chatting and interacting with friends using other means, like Snapchat, Instagram and Whatsapp.
What makes WhatsApp irresistible is that it has more than 450 million active users and adds more than a million more every day.
Here's the basis of the problem:
Facebook - On its wall front, users could customise news feeds, posts, photos etc but again chat's big problem forced users to either get offline or entertain all online friends. To overcome the problem of plenty, Facebook came up with the new customisation feature for chat, where friends could be added to chat groups and personal status could be set for online or offline for a particular group. However, this too didn't work.
WhatsApp - Is an instant messaging application which never spams users and also comes free. The best feature of WhatsApp is its 'last seen at', so if you are busy or just don't want to chat with anyone you settle into the 'idle' mode and this reduces the chance of getting bugged by pings and messages. Needless to say, WhasApp became a rage, something that bred not just envy in rivals, but also a desire to take it over.
Facebook therefore hardly had any option but to grab the users in through the easiest option and that is, acquire WhatsApp, rather than go in for a huge rebuilding effort with own chat that may or may not be successful in engaging more daily users.
Facebook had earlier done the same with Instagram in 2012 and then reportedly also made a $3 billion offer to buy Snapchat (which was spurned). In the end, they spent a massive sum to buy the fastest-growing application of them all.