Facebook CEO riding high - for now, after WhatsApp deal

Mon Feb 24, 2014 1:02am EST
 
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By Alexei Oreskovic and Leila Abboud

SAN FRANCISCO/BARCELONA (Reuters) - Facebook Inc Chief Executive Officer Mark Zuckerberg will take a victory lap at the world's largest mobile technology conference in Barcelona on Monday, after beating out Google Inc in a $19 billion acquisition of free messaging service WhatsApp. But he is facing a new arduous race on the horizon.

Just 18 months after appearing at risk of getting crushed by the swelling mobile wave, the No. 1 social network is riding high. It gets a huge chunk of ad revenue on world-wide users of smartphones and tablets, from virtually nothing several years ago.

Now, Zuckerberg's purchase of WhatsApp - while raising eyebrows with the hefty price paid for a company that boasts 450 million users but has little revenue - places Facebook at the heart of smartphone communications.

It's a twist that is sure to have some telecom bosses in Barcelona gritting their teeth. WhatsApp and its fellow messaging apps, including China's WeChat and Israel's Viber, have punched a hole in operators' sales by offering a free alternative to text messages, a $120 billion market for operators. Research group Ovum said telcos lost $32 billion in text revenue last year and will lose $54 billion by 2016.

Zuckerberg and WhatsApp co-founder Jan Koum are likely to cast themselves as partners not foes of the industry in their appearances at Mobile World Congress on Monday.

Zuckerberg's keynote at 17:00 GMT is expected to focus on Facebook's efforts to make wireless Internet access easier and more affordable in developing countries.

SURPRISE DEAL

Facebook's purchase of WhatsApp is its latest move to transform a platform and company born on the PC into a full-fledged network for a mobile generation. Zuckerberg's progress so far on mobile has positioned the company to take advantage of the fast-growing markets. And it has helped boost Facebook's stock roughly 150 percent since July.   Continued...

 
Facebook CEO Mark Zuckerberg smiles in an onstage interview for the Atlantic Magazine in Washington, September 18, 2013. REUTERS/Jonathan Ernst