Facebook Inc Chief Executive Officer Mark Zuckerberg will take a victory lap at the world's largest mobile technology conference in Barcelona on Monday, after beating out Google Inc in a $19 billion acquisition of free messaging service WhatsApp. But he is facing a new arduous race on the horizon.
Just 18 months after appearing at risk of getting crushed by the swelling mobile wave, the No. 1 social network is riding high. It gets a huge chunk of ad revenue on world-wide users of smartphones and tablets, from virtually nothing several years ago.
Now, Zuckerberg's purchase of WhatsApp - while raising eyebrows with the hefty price paid for a company that boasts 450 million users but has little revenue - places Facebook at the heart of smartphone communications.
It's a twist that is sure to have some telecom bosses in Barcelona gritting their teeth. WhatsApp and its fellow messaging apps, including China's WeChat and Israel's Viber, have punched a hole in operators' sales by offering a free alternative to text messages, a $120 billion market for operators. Research group Ovum said telcos lost $32 billion in text revenue last year and will lose $54 billion by 2016.
Zuckerberg and WhatsApp co-founder Jan Koum are likely to cast themselves as partners not foes of the industry in their appearances at Mobile World Congress on Monday.
Zuckerberg's keynote at 17:00 GMT is expected to focus on Facebook's efforts to make wireless Internet access easier and more affordable in developing countries.
Facebook's purchase of WhatsApp is its latest move to transform a platform and company born on the PC into a full-fledged network for a mobile generation. Zuckerberg's progress so far on mobile has positioned the company to take advantage of the fast-growing markets. And it has helped boost Facebook's stock roughly 150 percent since July.
But with a new crop of smartphone applications threatening to eat into Facebook's audience, worrying signs of waning interest amongst younger users - which the WhatsApp acquisition may help address - and a tech landscape evolving more rapidly than ever before, Facebook can't afford to fall behind again.
That is critical for Facebook as