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Google Exec Says WhatsApp Not Worth What Facebook Paid
Posted March 6, 2014
Google Exec Says WhatsApp Not Worth What Facebook Paid
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By Seth Fitzgerald. Updated March 6, 2014 12:22PM

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Google may have been interested in buying WhatsApp prior to Facebook's acquisition, but when it was considering a deal, the acquisition would have amounted to $6 billion. Now Google's chief business officer, Nikesh Arora, is questioning the logic behind spending $19 billion on a small company.

Along with critiquing the WhatsApp deal, Arora also spoke about mobile advertising during a Morgan Stanley conference in San Francisco. Arora said the monetization of mobile platforms could eventually yield much more revenue than that provided by desktop ads, and companies that shift toward mobile will benefit greatly.

"The desktop world took the world of advertisers from tens of thousands to a few million," Arora said. "I think as we go forward, that a few million becomes tens of millions as mobility becomes more relevant."

Facebook's Expensive Deal

Had WhatsApp accepted Google's proposed acquisition deal, each one of its 55 employees would have been "worth" around $100 million. Since the deal that WhatsApp eventually made with Facebook was much larger, the social network paid an estimated $345 million per employee. That is not an efficient use of money, Arora said.

When the topic of mobile messaging apps came up at the Morgan Stanley conference, Arora said he did not agree with spending such exorbitant sums on a start-up.

"$500 million per employee? Is that a good use of our money?" Arora said. "Are you recommending we buy some Asian messaging service?"

Will WhatsApp Grow into $19 Billion?

We asked Jeff Kagan, an independent technology analyst, for his opinion on the acquisition of WhatsApp. He told us that while WhatsApp may not be worth $19 billion right now, it's likely Mark Zuckerberg is looking at WhatsApp as something that will continue to grow and eventually become worth the amount that Facebook spent on it.

"One good way to stay with the current flow is to spot early-stage companies in a hot space. Facebook thinks WhatsApp is that kind of company." Kagan said. "As for spending $19 billion on WhatsApp, I would guess that was pure Zuckerberg. WhatsApp may not be worth that much today, but to Zuckerberg it's all just play money anyway, like on a Monopoly board."

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