Are we currently in an ‘App’ bubble, similar to the dotcom bubble of the last decade? Will WhatsApp become another advertising medium with little user privacy?
These were some of the hot-button questions raised on social networking sites as Indian users took in the news of Facebook’s $19 billion acquisition of instant messaging company WhatsApp.
The enormity of the transaction can be gauged from the fact that only 14 Indian companies are valued higher than WhatsApp. On Thursday, the chatter among industry captains revolved around the astronomical valuation of the five-year-old, 55-employee company.
Harit Nagpal, Managing Director & CEO of Tata Sky, declared on Twitter that the episode marks the beginning of ‘Dotcom Bubble 2.0’.
Anand Mahindra, Chairman & Managing Director of Mahindra & Mahindra, tweeted: “Every CEO’s trying to figure out What’s Up when FB pays $19Bn for WhatsApp. It redefines the meaning of, & method of, value creation.”
In response, Ganesh Natarajan, Vice Chairman of Zensar Technologies, said: “When Facebook is valued at 190 billion, all else is justified I guess!”
The deal is the second-largest merger and acquisition deal in the internet space. The $126 billion merger deal between Times Warner and AOL in 2000 was the biggest but it failed miserably around the time the dotcom bust of 2000.
That bubble was powered by the rise of Web sites that engaged in daring business practices in the hopes of dominating the market. Most engaged in a policy of growth over profit, assuming that if they built up their customer base, profits would eventually catch up.
Several internet users have said that they will move out of WhatsApp owing to privacy concerns with Facebook.
“Good for FB, good for seller. Good for NSA (National Security agency) & GCHQ (UK Government Communication Headquarters). Sad day for privacy. Good day for alternatives to #WhatsApp #Viber #Blackberry,” posted a Twitter user.
Facebook has been criticised over invasion of privacy by the media and users many times over the years. Its reputation took a further hit recently after news reports suggested that the social networking site had allowed the US government to access its databank.
WhatsApp has built a loyal following in part because of a refusal to run any ads. It has over 40 million active users in India.
“I’m going to delete WhatsApp if I start getting pokes,” Muhammad Ali posted on Twitter. The comment was re-tweeted 85 times.