The key questions for investors about Facebook's (NASDAQ:FB) acquisition of WhatsApp will be how Facebook inevitable chooses to monetizes the popular service. WhatsApp implemented a subscription model last summer, offering service for a mere $1 per year. That approach directly contrasts with Facebook's stance, as Facebook has made it quite clear that it will never charge a fee for its service. While Facebook relies on ads to pay the bills, WhatsApp will decidedly avoid them altogether.
Including Instagram, Facebook will soon operate 3 distinct services that offer different value propositions to users. The Internet is becoming more and more social every day, and Facebook is committed to owning as much of that future as possible. Buying WhatsApp for $19 billion is a bold move, but it might just pay off in the long run after WhatsApp approaches 1 billion users.
In this segment of Tech Teardown, Erin Kennedy discusses WhatsApp's future with Evan Niu, CFA, our tech and telecom bureau chief.