Facebook has just announced it is taking over WhatsApp Inc. for $19 billion, $4 billion in cash and the rest in shares. WhatsApp is a very popular app which means you avoid paying text fees on your smart phone: it uses the Internet to relay the messages, which includes attached images. It costs just $1 to subscribe to, although there is a free option.
The valuation sounds incredible, yet Facebook founder Mark Zuckenberg apparently thinks he has a bargain. Facebook is declining on PC platforms, so it makes sense to want to migrate to phones.
WhatsApp was launched in 2009 by ex-Yahoo employees Jan Koum and Brian Acton. They wanted to make it the biggest cross-platform messaging service in the world. It has also been described as the biggest social network you'd never heard of (sure, I'd never heard of it, but then I'm the wrong generation). It does to SMS (text and its attachments) what Skype did to international calls.
The company claims that over 450 million use it every month, with 1 million new subscribers a day. The software it uses is described in a US patent application published in November 2012 in the names of Koum and Acton, Multimedia transcoding method and system for mobile devices. It has not yet been granted patent protection (to me, making the valuation by Facebook all the more extraordinary). Below are two of the drawing pages.
The registration in 2011 of WhatsApp as a US trade mark is certainly valuable, though.
There may be trouble ahead, though. Two companies have taken WhatsApp to court, alleging infringement of US patents.
In October 2012 Intercarrier Communications LLC alleged patent infringement of Inter-carrier messaging service providing phone number only experience, illustrated below.
In October 2013 Israeli company Triplay alleged patent infringement of Messaging system and method, illustrated below.
There is an interesting Wikipedia article on WhatsApp.