Global Mobile Messenger War
The acquisition of messaging company WhatsApp by Facebook is expected to bring about an upheaval in the worldwide mobile messaging market dominated by WhatsApp, Line, and WeChat. Experts are saying that the takeover is part of the social networking giant’s strategy to dominate the global mobile platform market by grabbing the international messaging market.
According to major overseas media outlets on Feb. 20 (local time), the social media giant is going to buy WhatsApp for US$16 billion (17 trillion won). The number is the highest-ever M&A deal between Internet application providers, a sixteen-fold increase from the 2012 figure for Facebook’s purchase of social networking service Instagram.
There was widespread speculation that a large-scale M&A deal was going to be made, in that global IT companies such as Google reportedly sounded out WhatsApp’s interest in selling them all or parts of itself. Moreover, the messaging company’s profit model, that provides its service at US$0.99 per year, has already proven to be effective. In particular, the combined market share of Facebook Messenger, which has a large number of users in the US, and WhatsApp subscribers can overwhelm that of WeChat or Line. Thus, Facebook’s move is causing alarm among major messaging companies.
Currently, WeChat is the top-ranked mobile messenger application with 600 million subscribers, followed by WhatsApp (450 million people), Line (350 million), and Kakao Talk (140 million).
Following its success in the US and European markets, Facebook is likely to grow fast in Asia as well, where the mobile messaging market is particularly strong, by absorbing WhatsApp subscribers. As a result, Line and WeChat are in a precarious position; they might lose their stronghold in the Asian market. The M&A deal is also a setback for Kakao Talk, which previously sought to enter the Southeast Asian market of Indonesia and the Philippines, after successfully dominating the Korean mobile messaging market.
The deal between Facebook and WhatsApp came on the heels of the recent purchase of messaging platform and app-maker Viber by Japanese online retailer Rakuten. Therefore, competition between global mobile messengers for market dominance is expected to be much more heated up.
An official at Korea’s top portal operator Naver said, “The acquisition of WhatsApp by Facebook is a case that confirms the importance of mobile messengers in the mobile market.” It means that the power of mobile messengers is strong, as shown by Kakao’s ability to grow as a platform operator in Korea through various profit models, including games based in Kakao Talk.
Facebook is projected to independently run the soon-to-be-merged company and maintain the current messaging service method for the time being. However, the US firm’s influence is likely to grow after sharing subscribers with WhatsApp and featuring new profit models for its messaging app in the future.
Hence, growing competition with global companies is a big burden for local mobile messenger service providers. In fact, as the news of Facebook’s buyout was reported, the stock price of Naver, the company behind messaging app LINE, decreased by 8.13 percent in the stock market on Feb. 20.