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Comment by gojomo | Hacker News Reader

There must have been other bidders – such as Google, Apple, Microsoft – who saw WhatsApp as an end-around Facebook's social dominance.

So imagine one of those other bidders had won, at a lesser price. Facebook might still have taken a 5% hit, facing a newly-empowered competitor. At least now, as with Instagram, the threat has been absorbed into the mothership.

It's a rich price, but arguably strategically justified.

The people who criticized the prices paid for YouTube and Instagram were very wrong. Also wrong were those who said Facebook was crazy for not accepting Yahoo's buyout offer, or that private investors were crazy for giving Facebook its rich pre-IPO valuations. Facebook keep chugging along, knowing and confident in its understanding of the opportunities and threats.

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Thank you. This is the justification I was looking for. It felt like this acquisition was driven by a fundamentally different motivation than the Instagram acquisition and the Snapchat offer, but I couldn't put my finger on it: Facebook wasn't paying $40/user, they weren't paying $0.5B/engineer, and (unlike Instagram or Snapchat) they were not scared of WhatsApp as a competitor (at least not in terms of mindshare, because there's no evidence that WhatsApp was stealing the engagement of Facebook users)--they were just scared of what would happen if Google bought them first. Preventing Google from getting a leg up in the social space (especially since Hangouts is actually a very good product, despite having what I presume to be a comparatively low active user base) is probably worth far more than $16B to them, so in that sense they got a good deal. But admitting that strategy to their shareholders might not play well.

It will be interesting to see how this strategy works moving forward. If they're not careful, it could become an easy way for Google/Apple/Amazon/Microsoft to bleed Facebook dry.

So should facebook absorb every social threat? What would happen if Google's hangouts started to become popular, or another startup?

No, for their own interest they should do what they can to combat the most vital threats.

>What would happen

That would be more of a problem for Microsoft's Skype.

Hangouts is also a messaging app that is meant to replace texts.

True, but the only thing I've ever heard it praised for is how well it handles multi-person video chats. I've never heard of anyone using it for purely text chats. Maybe that will change, but it's not an SMS replacer yet at any level.

Neither is What's App

Of course people use hangouts for purely text chat -- it's Google Talk!

Yep, my company uses Google Talk for IM, so as a result most of us use the Hangouts app if we want to chat on mobile.

Absorbing upstart threats worked for Rockefeller!

And yes, social threats that have half-a-billion active users, and still-accelerating adoption, definitely deserve Facebook's acquisition attention.

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