While Sarah Lacy’s “Follow the photos: The real reason Facebook just paid almost 10% of its market cap for WhatsApp” analysis is well done and likely part of the rationale behind Facebook’s purchase of WhatsApp for a staggering $19 billion, I think SimonDSG and samueljesse in the comment section are closest to articulating what is really going on: Facebook is concerned about the rapid rise of the Asian mobile chat apps. These hugely popular mobile apps with hundreds of millions of paying users are the center of a social networking revolution unfolding all over the world, but especially among younger users and especially in the East. Hamish McKenzie wrote about this trend in his excellent book Beta China and it has only accelerated since then.
A lot of (us older?) people using Facebook today might be surprised to learn that Facebook through a web browser is now the old way of social networking, and will soon be obsolete. Many of us came to Facebook late, too. How can this daily activity in which we participate already be nearly obsolete?
WhatsApp and WeChat, among many other apps, are at the cutting edge of social networking. Both of these apps are centered around user-to-user and group chatting via text, photo, and video. They are also both mobile apps, a fact important to Facebook since most traffic to the social network now comes through mobile, and especially dedicated mobile apps (rather than built-in web browsers). I wrote about this trend toward dedicated apps in “How Apple Made the Web Tiny” but even I was unprepared for just how decisively mobile apps have conquered the web.
Lily Kuo highlights the differences between these two apps in her Quartz article “WeChat is nothing like WhatsApp—and that makes it even more valuable”. She points out at the end of the article that most users will be fine with using both apps. That may be true of users, but Facebook doesn’t want its apps to sit next to competitors’ apps; it wants to position itself to better compete against them. Facebook will either work to add additional capabilities to WhatsApp to make it more like WeChat and similar apps, or it will continue to buy and develop new mobile apps, creating a suite of apps that provides the various services people are migrating to as social networking evolves.
This is part of a massive decentralizing of social networking capabilities. Instead of a monolithic central organizing website, social networks are splitting into various mobile apps. Facebook’s recent purchases and app developments are how it is transforming itself. To be clear, though, Facebook is coming from behind; it missed the relevant trends at first. Now Facebook is trying to catch up with Asian companies like China’s Tencent (which owns WeChat) and at the same time it is trying to head off Tencent and other Asian companies’ push into international markets, including the United States. Consider this: in Apple’s U.S. App Store, WhatsApp is today the number one free downloaded “Social Networking” app, but WeChat is in the top 30.
If you are still using a web browser to access Facebook, consider yourself forewarned: big changes are coming, and a lot faster than you might want to deal with. Facebook’s $19 billion purchase of WhatsApp is just the beginning. Facebook is competing at a global level for users, attention, and money, and that means big changes are coming to your social networking experience.