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A woman holds a tablet displaying WhatsApp’s logo in front of the screen with the Facebook logo in this photo illustration taken Thursday in Prague. (Reuters photo)

Facebook $21-per-eyeball offer underscores instant message platform’s rise

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By Matthew Campbell

Bloomberg News

LONDON — Dan Stiller isn’t using Facebook much anymore. Mark Zuckerberg is paying $42 to get him back.

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That $21 per eyeball is what the Facebook founder and chief executive offi cer will shell out for each user of WhatsApp, the instant-messaging platform he’s acquiring for $19 billion. The goal: to ensure Facebook, and not another mobile application, stays at the center of the digital lives of people like Stiller, a 27-year-old construction manager in Melbourne, Australia.

“Everybody’s gravitating to WhatsApp,” said Stiller, who uses the service to coordinate evening plans with friends and keep in touch with relatives in England and Canada. “I use it pretty much all day,” he said. “I don’t really use Facebook that much and it’s pretty rare for me to even send a normal text message.”

With 450 million users, WhatsApp has a particularly strong following in Europe and India and is less known in the United States, Zuckerberg told investors Wednesday. The service is rapidly displacing traditional text-messaging as the preferred method for young people to stay in touch on mobile devices.

One day last June, WhatsApp carried 27 billion messages, it said on its offi cial Twitter feed — 42 percent more than all the SMS texts sent worldwide on a typical day last year, according to researcher Informa Plc.

Free for the first year and 99 cents annually thereafter, WhatsApp is almost always cheaper than texting, particularly across national borders. For sending photos and videos, WhatsApp is typically far less expensive than multimedia messaging services from carriers. And unlike Apple’s iMessage and BlackBerry’s BlackBerry Messenger, it has always been available across multiple operating systems, making it easy for an iPhone user, for instance, to chat with a friend with a Samsung Galaxy.

Bolting WhatsApp onto Facebook, which has been targeted by privacy groups for what some say is insufficient protection of customer data, raises concerns for some users. WhatsApp itself has been criticized for storing data mined from address books, which it does to find other contacts using the service.

Over coffee Thursday at a Starbucks Inc. café facing Berlin’s Brandenburg Gate, Spanish tourist Patricia Peinado debated with friends whether to switch to another chat app to ensure the privacy of their conversations. “We think they’re going to share our information with Facebook,” the 30-year-old said.

WhatsApp currently carries no advertising, and messages can only be seen by a pre-selected group. Those conversations can contain huge amounts of detail; it’s not uncommon for users to leave two-person or group chats on WhatsApp open for weeks or months, communicating in quick bursts throughout each day. Those messages offer a rich source of data for Facebook as it increasingly customizes its advertising, though Zuckerberg Wednesday said WhatsApp would operate independently of the main Facebook service.

Facebook’s surprise deal follows the Menlo Park, Calif.-based company’s $700 million acquisition of photo-sharing app Instagram in 2012, and what a person familiar with the situation has said was a $3 billion offer last year for Snapchat, which allows users to send self-deleting photos.

WhatsApp’s strength in Europe and India will help Facebook as it seeks to expand outside of North America, where it gets almost half its revenue. And the American market offers good growth prospects for WhatsApp, according to Informa.

Zuckerberg hinted at WhatsApp’s potential threat to Facebook in its bid to maintain its position as the preferred channel for marketers trying to reach so-called digital natives under 30.

It’s “the only widely used app we’ve ever seen that has more engagement and a higher percent of people using it daily than Facebook,” Zuckerberg said on a conference call.

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