In Part 1, I looked at what could be behind Facebook’s acquisition of WhatsApp and subsequent purchase of Oculus Rift. How are these seemingly different acquisitions related? There is no question that both Facebook and Google are in a race to build the next-generation computing/communications platform (after mobile) and the battle lines are being drawn between the over-the-top (OTT) players and telecommunications companies. After all, both Facebook and Google count on telcos to deliver services to their customer base. How will the WhatsApp and Oculus Rift acquisitions shape Facebook and impact the rest of the market including Google and mobile?
Facebook did not pay $19 billion for WhatsApp simply because it’s an SMS replacement, a Skype and Twitter competitor, because it could grow its international subscriber base, or could attract customers among the coveted millennial demographic – although these reasons are icing on the cake. Facebook’s WhatsApp acquisition was a shot across the bow to telcos: we will be masters of our own destiny and not be reliant on you to reach our customers. With the addition of voice calling to WhatsApp, this puts even more pressure on mobile providers who are already feeling the heat from WhatsApp, which has cost them billions in lost SMS revenue. Now, they have to worry about an even bigger impact on their bread and butter voice business if that follows a similar pricing pressure trajectory. With an already 450 million strong WhatsApp subscriber base added to Facebook’s own customer base, Facebook has the ideal launch pad for the next-generation communications platform provided by Oculous Rift. While Facebook and Google have similar business (new subscribers and advertising revenue) and personal (secure a place in the history books) motivation that is driving both companies overall strategy, their approach is quite different.