Messaging app WhatsApp is in the negotiating phase over prices with Google in what could be Google’s next billion dollar acquisition, according to an inside source, reports Digital Trends.
Google and WhatsApp have been talking for “four or five weeks,” citing a person who claims to have knowledge of the negotiations. So far, WhatsApp has been able to push the acquisition price to nearly $1 billion by “playing hardball,” the source says.
Last month, the Wall Street Journal reported that Google had approached WhatsApp, though it didn’t indicate when or how serious the talks might be.
WhatsApp is one of the most popular messaging applications available to mobile users.
The app allows users on almost any mobile platform -including Android, iOS, BlackBerry, and Windows Phone – to send instant messages, images, audio, and video messages to one another.
The messaging app essentially allows for cross-platform texting without having to pay for SMS.
There are rumors that Google Babel will combine Google’s disparate communication services under one roof, but the platform still needs to do something to innovate in this space; mobile messaging has been taken over by smaller apps and Facebook has made a major push as well.
Google hasn’t given an answer to this competition. Even Google Product Manager Nikhyl Singhal confessed to GigaOM in June of last year that “We have done an incredibly poor job of servicing our users here.” Messaging is a huge, gaping hole in Google’s mobile strategy, writes Digital Trends.
Google can’t afford the time to rebrand and rebuild a competitive messaging app at the risk of entering the game too late – or, it needs to be able to work off the platform WhatsApp has already established and use this technology (and sensically, the user base) to fill out the purported Babel.
In January, WhatsApp announced that it had set a personal record on New Year’s Eve, with 7 billion inbound messages sent that day. Another 11 billion outbound messages were sent in the same time period. WhatsApp’s previous one-day record stood at 10 billion total messages, says Cnet.
Whether WhatsApp is actually worth $1 billion is up for debate.
Actually at the end of last year, Facebook was rumored to be interested in buying WhatsApp, though the price tag was never publicized for that rumor. If the $1 billion figure is correct, it would put WhatsApp in the same ballpark as Instagram, which was acquired by Facebook last year.
WhatsApp, while popular, doesn’t have the kind of cachet that Instagram did at the time of that acquisition, making such a valuation seem high.
WhatsApp has remained mum about its revenue, but one of the sources says that WhatsApp may have a ballpark of $100 million in yearly revenue.
WhatsApp has a proven monetization scheme. Its yearly but nominal $0.99 subscription fee keeps the service ad-free. Behind the scenes however, WhatsApp also generates revenue through profitable partnerships with international telecommunications companies.
However, a rep for Google says the company does not comment on rumor or speculation. WhatsApp did not immediately respond to our request for comment.