Social Media

FB-WhatsApp combine is a bigger threat for local messaging firms

Abhishek Law S Ronendra Singh Kolkata/New Delhi | Updated on November 25, 2017 Published on February 20, 2014

But valuation on the upside as desi players hope to unlock value

Facebook’s acquisition of instant messaging platform WhatsApp could threaten the desi instant messaging players such as Hike and GupShup.

According to those associated social networking platform industry, competition is likely to stiffen even more with a deep-pocketed Facebook pitching its might behind WhatsApp.

While Facebook has 92 million users in India, WhatsApp is estimated to have close to 35 million users here.

Other players

Other major foreign players, including WeChat (owned by Chinese company Tencent Guangzhou Research); and Japan’s Line Corporation- owned player “Line” are already backed by deep-pocketed investors.

Similarly, Viber is now owned by Japanese e-commerce giant Rakuten Inc. Thus the market for smaller and home-grown IM players is increasingly tightening.

According to Sameer Agarwal, Chief Marketing Officer, RockeTalk (a social network around interest groups), Facebook have had the habit creating “inflationary pressures” on the market by acquiring talent. “It has been trying to dominate the market and the acquisition of WhatsApp makes sense in that regard,” Agarwal pointed out.

Anubhav Nayyar, Country Manager, Viber, said it was too early to say what kind of impact the Facebook-WhatsApp deal will have. “We are not unduly worried as ours is a differentiated platform with both instant messaging and calling capabilities. What the deal tells us is that there is a lot of investor interest in the instant messaging space as mobile has become the platform of choice. Whether the heightened investor interest results in more acquisitions or other types of partnerships, remains to be seen.”

Valuation

Everyone though is watching the business model that Facebook adopts. Dippak Khurana, CEO and Co-Founder, Vserv.mobi. said, “It will be interesting to see if WhatsApp moves away from its subscription model and adopts advertising. After all, in effect, Facebook is going to be able to have access to millions of verified mobile numbers, many of whom may not even be on the Facebook app. Additionally with Google pushing Hangouts as a default mobile messaging app, Facebook was forced into doing something in the mobile messaging space.”

Instant messaging firms are happy with the valuation given to WhatsApp. Kavin Mittal, Creator, hike (a subsidiary of Bharti and SoftBank) “The Facebook-WhatsApp deal highlights the increasing importance of the messaging space and the role it will play in mobile-internet going forward. We're seeing India following a similar growth trajectory especially in the messaging space.”

Rocketalk’s Agarwal points out to the fact that at $19 billion, WhatsApp has been valued at approximately 10 per cent of Facebook’s market value.

“WhatsApp is likely to equal Facebook’s user-base in another two years time,” he said.

Indian players will be hoping that if they can’t survive the onslaught of the Facebook-WhatsApp combine, they would at least get similar valuations if forced to exit.

(With inputs from Adith Charlie)

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Published on February 20, 2014
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