NEW YORK: Facebook is buying mobile messaging service WhatsApp for $19 billion in cash and stock, by far the company's largest acquisition and bigger than any that Google, Microsoft or Apple have ever done.
The world's biggest social networking company said Wednesday that it is paying $12 billion in Facebook stock and $4 billion in cash for WhatsApp. In addition, the app's founders and employees — 55 in all — will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.
The deal translates to roughly nine per cent of Facebook's market value. In comparison, Google's biggest deal, Motorola Mobility, stood at $12.5 billion, while Microsoft's largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.
The price stunned Gartner analyst Brian Blau. ''I am not surprised they went after WhatsApp, but the amount is staggering,'' he said.
Facebook likely prizes WhatsApp for its audience of teenagers and young adults who are increasingly using the service to engage in online conversations outside of Facebook, which has evolved into a more mainstream hangout inhabited by their parents, grandparents and even their bosses at work.
''This is a bet on the future for Facebook,'' Blau said. ''They know they have to expand their business lines. WhatsApp is in the business of collecting people's conversations, so Facebook is going to get some great data.''
In that sense, the acquisition makes sense for 10-year-old Facebook as it looks to attract its next billion users while keeping its existing 1.23 billion members, including teenagers, interested. The company has said it will develop a ''multi-app'' strategy, creating its own applications that exist outside of Facebook and acquiring others.
''Facebook seems to be in acknowledgement that people are using a lot of different apps to communicate,'' said eMarketer analyst Debra Aho Williamson. ''In order to continue to reach audiences, younger in particular, it needs to have a broader strategy...not put all its eggs in one basket.''
Facebook said it is keeping WhatsApp as a separate service, just as it did with Instagram, which it bought for about $715.3 million in two years ago.
WhatsApp has more than 450 million monthly active users. In comparison, Twitter had 241 million users at the end of 2013.
Facebook CEO Mark Zuckerberg says WhatsApp is on path to reach a billion users. ''The services that reach that milestone are all incredibly valuable,'' Zuckerberg said.
WhatsApp, a messaging service for smartphones, lets users chat with their phone contacts, both one-on-one and in groups. The service allows people to send texts, photos, videos and voice recordings over the Internet. It also lets users communicate with people overseas without incurring charges for pricey international texts and phone calls.
It costs $1 per year and has no ads. The deal is expected to close later this year. Shares of Menlo Park, California-based Facebook slid $1.12 to $66.94 in extended trading after the deal was announced.
MUMBAI: As Facebook celebrates its 10th birthday, one of its biggest challenges is to tap the mobile market in emerging Asian economies, where it can drive expansion after growth in the West tapers off.
India is expected to overtake the United States as the country with most Facebook users in 2014, with its total number forecast to surge beyond the 150 million mark from the current 93 million level.
But despite its rapid growth in parts of Asia, experts say Facebook cannot afford to be complacent and locally-tailored competitors are threatening to steal its thunder in countries such as Indonesia.
With Internet penetration still relatively low in Asia's emerging economies, many people's first online experience comes when they log on with a mobile phone.Kevin D'Souza, Facebook India's head of growth and mobile partnerships, says the key to success in emerging markets therefore depends on encouraging access via basic mobiles known as “feature phones”.
“We're already seeing the majority of users sign up to Facebook on mobile devices,” D'Souza told AFP.
“A large chunk of mobile phone users in India are feature phone users, and with low price points, these devices are becoming the first Internet connected device many people will own.”
He said more than 100 million people globally are now using the “Facebook for Every Phone” app specifically for non-smartphones and many of the next billion users Facebook hopes to attract are expected to do the same.
The Nokia Asha 501 feature phone now comes preloaded with Facebook, while India's telecom giant Bharti Airtel announced last month that it would offer free Facebook access in nine local languages to prepaid customers.
In India, more than 40 percent of the 1.2 billion population have cell phones but barely five percent are smartphone users, according to estimates by consultancy Analysys Mason.
Nevertheless, researchers at eMarketer predict India will reach 152.4 million Facebook users this year, surpassing the 151.1 million forecast for the US.The growing importance of mobile Internet access was demonstrated with Facebook's strong earnings released last week.
Advertising revenue surged to $2.34 billion in the quarter, up 76 percent over the past year, and more than 53 percent of that figure was mobile advertising revenue -- up from 23 percent in the fourth quarter of 2012.
“2013 was the year we turned our business into a mobile business,” said boss Mark Zuckerberg, who began the company as a student a decade ago, since when it has swelled to attract 1.23 billion active users worldwide.
Aakrit Vaish, a founder of mobile company Haptik, said it was not just the sheer population size that made India such a big Facebook player.
“Culturally in our country we have always been, for better or worse, very inquiring about other people's lives,” he said.
He believes an additional benefit for Facebook in India has been the prominence of English speaking among the urban elite, who were the first to get access to the social network.
The same is true of the Philippines, where more than one in three people are on Facebook according to marketing agency We Are Social whose data shows the country spending more hours per day on social media than anywhere else in Asia.
Facebook has overtaken mobile text messaging as a key communication tool, also embraced by Philippine politicians and activists -- President Benigno Aquino's Facebook page has more than three million “likes”.
Protesters last year used the network to vent anger over the misuse of state funds by lawmakers, snowballing into a mass rally in Manila in August.
But experts say that Facebook's dominance in some Asian markets faces a threat from competitors who are adapting to local tastes.
With Facebook banned from China since 2009, Indonesia has the second largest number of users in Asia, with around 65 million.—AFP
NEW YORK: IBM Corp has been sued by a shareholder who accused it of concealing how its ties to what became a major US spying scandal reduced business in China and ultimately caused its market value to plunge more than $12 billion.
IBM lobbied Congress hard to pass a law letting it share personal data of customers in China and elsewhere with the US National Security Agency in a bid to protect its intellectual property rights, according to a complaint filed in the US District Court in Manhattan.
The plaintiff in the complaint, Louisiana Sheriffs' Pension & Relief Fund, said this threatened IBM hardware sales in China, particularly given a program known as Prism that let the NSA spy on that country through technology companies such as IBM.
The Baton Rouge pension fund said the revelation of Prism and related disclosures by former NSA contractor Edward Snowden caused Chinese businesses and China's government to abruptly cut ties with the world's largest technology services provider.
It said this led IBM on October 16 to post disappointing third-quarter results, including drops in China of 22 percent in sales and 40 percent in hardware sales.
While quarterly profit rose 6 percent, revenue dropped 4 percent and fell well below analyst forecasts.
IBM shares fell 6.4 percent on October 17, wiping out $12.9 billion of the Armonk, New York-based company's market value.
The lawsuit names IBM, Chief Executive Virginia Rometty and Chief Financial Officer Mark Loughridge as defendants, and says they should be held liable for the company's failure to reveal sooner the risks of its lobbying and its NSA ties.
"These allegations are ludicrous and irresponsible and IBM will vigorously defend itself in court," IBM spokesman Doug Shelton said in an e-mail.
The Louisiana fund is represented by Bernstein, Litowitz, Berger & Grossmann, a prominent class-action specialist law firm. It seeks class-action status on behalf of shareholders from June 25 to October 16, 2013, and damages for shareholder losses.
Loughridge is retiring as CFO this month at age 60, which IBM calls its traditional retirement age. Martin Schroeter, who has been IBM's head of global finance, is replacing him.
MUMBAI: An emotional advertisement for Google's search engine has become a hit in India and Pakistan by surprisingly invoking a searing and traumatic period in the shared history of the South Asian archrivals.
Officially debuting on television Friday, the commercial already has been viewed more than 1.6 million times on YouTube.
"Reunion" portrays two childhood friends, now elderly men, who haven't seen each other since they were separated by the 1947 partition that created India and Pakistan from the old British empire in South Asia. Partition sparked a mass exodus as millions of Muslims and Hindus fled across the new borders amid religious violence.
In the ad, one of the men reminisces to his granddaughter about his happy childhood in Lahore and how he used to steal sweets from a shop with his best friend, who the ad implies is Muslim. His granddaughter uses the search engine to track down the childhood friend in the Pakistani city. Then, with the help of the Pakistani man's grandson (and naturally, Google), she arranges a journey to New Delhi for a surprise reunion.
The ad struck a cultural chord with Indians and Pakistanis.
"If it doesn't move you, you've got a heart of stone," wrote Beena Sarwar, a Pakistani journalist and part of the Aman ki Asha (Hope for Peace) initiative that promotes peace between Pakistan and India, on her blog.
It might seem a risky strategy to co-opt partition for a feel-good search engine advertisement. The period is one of the roots of the bitter animosity between Pakistan and India that has led to three wars, a nuclear arms race and deadly fighting in the disputed Kashmir region. Shortly after the partition, an estimated 1 million Hindus, Muslims and Sikhs were killed in rioting, and 12 million were uprooted from their homes.
Yet Abhijit Avasthi, head of the Ogilvy India team that developed the ad, said the fact that partition evokes strong feelings among Indians and Pakistanis is one of the reasons the idea was chosen.
"Yes, this is a sensitive topic, a part of history with bitter memories" he said. "But that was the whole point, which is to tell people that those memories are in the past, that there is a way to revive your connection with your lost ones."
The spot also tapped into ordinary people's weariness with the hostilities.
"I don't see much hostility at the people's level," said Sanjay Mehta, a 48-year-old New Delhi-based businessman whose family is from what is now Pakistan.
But he added that travelling between the countries is not as easy as the ad portrays. "I want to visit Pakistan but it's not easy to get a visa."
Last year, India and Pakistan signed an agreement to make it easier for business travellers, senior citizens, divided families and religious pilgrims to get visas. However, improving ties have been set back by sporadic clashes in Kashmir.
PARIS: A slowdown in global warming that climate sceptics cite in favour of their cause was partly induced by one of the world’s most successful environment treaties, a study said on Sunday.
The UN’s Montreal Protocol, designed to phase out industrial gases that destroy Earth’s protective ozone layer, coincidentally applied a small brake to the planet’s warming, it said.
Without this treaty, Earth’s surface temperature would be roughly 0.1 degrees Celsius (0.2 degrees Fahrenheit) higher today, according to its authors.
“Paradoxically, the recent decrease in warming, presented by global warming sceptics as proof that humankind cannot affect the climate system, is shown to have a direct human origin,” according to the paper, published in the journal Nature Geoscience.
Signed in 1987 and implemented in 1989, the Montreal Protocol committed signatories to scrapping a group of chlorine- and bromine-containing chemicals.
Used in aerosol sprays, solvents and refrigerants, these substances destroy ozone molecules in the stratosphere that filter out cancer-causing ultraviolet light.
Some of the chemicals also happen to be hefty greenhouse gases, with a powerful ability to trap the Sun’s heat.
So their phaseout, which began to hit its stride in the 1990s, was also a small but perceptible gain in the fight against climate change, the scientists said.
From 1998 to 2012, Earth’s mean global temperature rose by an average of 0.05 C (0.09 F) per decade, a benchmark measure of warming.
This is far less than the average decadal increase over half a century of 0.12 C (0.2 F), and is out of sync with the ever-rising curve of greenhouse-gas emissions.
As a result, sceptics claim the 15-year “Pause” as proof that climate change has natural causes, showing that green calls to reduce fossil-fuel emissions are flawed or a scam.
The paper, led by Francisco Estrada, an atmospheric physicist at the Autonomous National University of Mexico, is a statistical comparison of carbon emissions and warming during the 20th century.
Overall, temperatures rose last century by 0.8 C (1.4 F).
Cooling and warming
Two World Wars contributed to cooling, as did the Great Depression — massively so. From 1929 to 1932, annual emissions of carbon dioxide (CO2) fell by 26 per cent.It took until 1937 for CO2 emissions to return to their pre-1929 levels.
The cooling effect took some time to kick in, but it lasted until the middle of the century.
The post-World War II boom led to a surge in emissions that, from 1960, began to be perceived in a clear signature of sustained warming, according to the investigation.
The paper said that the “Pause” may also be attributable, but in a far smaller way, to changes in rice farming in Asia, a generator of the potent greenhouse gas methane.
In a comment on the study, Alex Sen Gupta, of the Climate Change Research Centre at the University of New South Wales in Australia, said the cooling benefits from the Montreal Protocol “are going to be short-lived.”
“In the end, the continuing rise in other greenhouse gases, particularly carbon dioxide, will keep temperatures marching upwards.”
In September, the UN’s paramount group of climate experts scoffed at the “Pause,” essentially calling it a non-issue.
They said the period of 1998-2012 was far too short to give a long-term view of climate trends.
They also hinted at selective bias, noting that the period began with a strong El Nino, a heat-linked weather phenomenon, thus making following years seem cooler by comparison.—AFP
SEOUL, South Korea: Samsung Electronics Co. has a new goal after overtaking Apple in smartphones: it wants to be world No. 1 in tablet computers too.
A top executive, Shin Jong-kyun, told analysts on Wednesday that Samsung's tablet business is growing rapidly and the company will become the biggest maker of tablet computers. He didn't give a timeframe.
Shin said Samsung's tablet sales will exceed 40 million units this year, more than double sales in 2012.
"Samsung tablet shipments started to grow remarkably since the second half of last year," he said.
Research group IDC estimates that Samsung sold 16.6 million tablets in 2012, lagging far behind Apple Inc. which sold 65.7 million iPads.
But Samsung is on the rise, capturing 20 percent market share in the July-September quarter while Apple, which led the commercialization of tablet computing, fell to 30 percent.
Apple previously had more than half of the global tablet market but its dominance has eroded as Samsung boosted sales with cheaper Galaxy Tab computers that offer many different screen sizes.
The same trend has already played out in smartphones. Apple transformed the mobile phone industry when it started selling the iPhone in 2007 but its success was quickly imitated and Samsung's smartphone shipments surpassed Apple's iPhone sales in 2011. The following year, the South Korean company became the largest supplier of mobile handsets overall, surpassing Nokia.
Shin's speech was part of Samsung's first event tailored for analysts and investors since 2005 as the South Korean company tries to boost its share price, which has flagged despite a string of record profits.
Responding to pressure to increase returns to investors, Chief Financial Officer Lee Sang-hoon said Samsung plans to double its dividend this year to the equivalent of 1 percent of the average price of its common shares.
Samsung also said it plans to adopt outside technologies and hire talent through aggressive acquisitions.
Kwon Oh-hyun, the company's vice chairman, said Samsung wants to be the top medical device maker through acquiring companies and developing its own technologies. In the last three years, Samsung spent $1 billion to buy 14 companies in medical equipment, mobile software and services.
The event failed to boost investor confidence immediately. Shares of Samsung closed 2.3 percent lower in Seoul.
The first rat pressed a lever, anticipating the tasty reward it’d been trained to expect. An implant in the rat’s brain converted its neural activity into an electronic signal and beamed the impulse to the brain of the second rat, which leaped forward and pressed a lever in its own cage. But rat #2 had never been trained to press the lever. Its movement impulse came not from its own brain, but directly from the brain of rat #1 – despite the fact that the two were separated by thousands of miles.
What we have created, said lead researcher Miguel Nicolelis, is “a new central nervous system made of two brains.”
That advance happened in 2012, and other labs were quick to one-up Nicolelis and his team. In the summer of 2013, a team of Harvard University researchers engineered a brain-to-brain interface between a rat and a human, enabling the human to control the rat’s tail movements simply by willing them to happen.
Finally, in August 2013, University of Washington scientists Rajesh Rao and Andrea Stocco succeeded in making one leap everyone was waiting for: A human-to-human brain-to-brain interface. By strapping one person into a non-invasive EEG helmet, and strapping the second into a transcranial magnetic stimulation (TMS) helmet, the researchers mind-melded themselves – for the sake of science.
The experiment went like this: Rao and Stocco sat across campus from one another, watching the same video game. Rao, wearing an EEG helmet, was at the controls – but instead of using his hand to hit the spacebar to fire, he simply imagined moving his hand.
Every time he did this, with near-instantaneous speed, a computer converted Rao’s brain signals into a digital signal and beamed it to Stocco’s TMS helmet. That helmet converted the signal into a burst of magnetic stimulation delivered to the precise region of Stocco’s motor cortex that controlled his right hand. Stocco’s hand would then twitch involuntarily, tapping the spacebar and (sometimes) scoring a hit in the game.
What did this feel like? “The two of us had very different experiences,” Rao says. “For me, it was only after the action had occurred that I had the chance to reflect upon what had happened – that it was Stocco’s hand, stimulated by my brain signal, that had caused the action. That realization was both exciting and a bit eerie.”
Stocco, on the other hand, reports that he simply felt an involuntary muscle twitch, which caused his hand to move and hit the keyboard. There was no conscious “need” to flex the muscle, he says, since the entire sequence of events from stimulation to movement happened within just a few tens of milliseconds. And what’s more, Rao says, “I don’t think he can resist the movement once he’s received the stimulation, since it operates at the subconscious level.” Eerie indeed.
But even with this subconscious level of connectivity, the process wasn’t flawless or error-free. And in fact, the system’s flaws and errors reveal some interesting truths about how our brains process information.
The EEG device that Rao used to send outgoing signals is based on technology that dates back to 1875. Though today’s devices are far more precise than those nineteenth-century models, they still operate on the same basic principle: Electrodes distributed across a person’s scalp pick up patterns of electrical activity that oscillate at specific frequencies within that person’s brain. Because EEG electrodes sit on the surface of the scalp, they can’t pinpoint this activity to a specific three-dimensional point within the brain. But with a little calibration, they’re very handy for tracking large-scale brain phenomena such as mood swings, shifts in attention and movement impulses.
TMS is a more recent technology – and, because it works by disrupting activity deep within the brain, more controversial. Numerous researchers have reported that TMS triggered seizures in some of their patients – although most experts now agree that the risk of seizure is extremely low for subjects not already prone to epilepsy. Meanwhile, experimenters throughout the 1990s and 2000s have succeeded in using TMS to trigger involuntary movements, to temporarily increase working memory, and even to treat depression.
On top of all that, TMS is non-invasive – so when it Rao and Stocco set out to design their brain-to-brain interface, TMS stood out as the clear choice for the output end. “I realized that, in EEG and TMS, we had noninvasive technologies for both recording from and stimulating the human brain,” Rao says. “So I approached Andrea Stocco, who had just arrived at UW and was using TMS for his cognitive psychology experiments. Andrea and I got really excited about the idea, and we started brainstorming.”
One thing that quickly became clear was that Rao’s EEG wouldn’t always send a clear signal. “EEG signals are quite hard to use for controlling devices,” he explains, “because the signal is a weak, noisy, filtered version of the underlying brain activity.” Movements of the eyes, face or body – or even stray thoughts – can interfere with the signal. Such stellar concentration took months of practice for Rao.
“In the early sessions,” Rao says, “we had several false positives, where Andrea’s hand would hit the ‘Fire’ key even though that was not my intention.” But as the trials wore on, Rao learned to control his EEG output more precisely – until, in the final session, Rao and Stocco achieved close to 100 percent accuracy (in their signals, though not in the game itself). “The only miss after that,” Rao says, “happened when Andrea’s hand moved but didn’t hit the key with sufficient force to fire the cannon.” A small bug indeed, in light of the team’s overall ambition.
Perhaps the most exciting thing about this project – aside from the “mind-meld” aspect – is the fact that it’s built on technology that’s rapidly entering the consumer marketplace. Although TMS remains confined to medical facilities and laboratories, groups of indie engineers around the world are hard at work building their own TMS devices. Home EEG kits, meanwhile, are widely available from companies such as Emotiv and NeuroSky – that is, if you wouldn’t rather build your own from scratch.
And though Rao’s initial tests transmitted mere movements, future iterations could theoretically transmit perceptions, concepts, or emotions. Then we truly would be talking about a mind-meld – allowing two people, through technology, to communicate directly via their brains.
For as long as we humans have felt curious about the world around us, we’ve struggled to communicate our thoughts to others clearly and to understand them in turn; to “get inside their heads.” But it hasn’t been until the last couple years that each of us can put on a little plastic helmet and watch what’s happening inside our own brains – and the brains of our friends – right at home. What’s next but to truly get inside each others’ minds and see what we find there?
Technologies like these might seem to have the potential to make robots of us all – but they also hint at a future of empathy more direct and immediate than any we’ve experienced before.
Top image by sweetsake / Shutterstock