Facebook agreed to pay some $16 billion for an app called WhatsApp this week, leading to widespread confusion and surprise among analysts (Forbescalled it a “stunner,” Reuters a “shocker”). Why would Facebook pay what is, objectively, an obscene amount of money for an app most Americans have at best barely heard of? (For comparison, Instagram and YouTube sold for $1 billion each, and the venerable and profitable Jim Beam bourbon company sold for only $13 billion.) And for those who have heard of it, why would Facebook pay so much money for a barebones, borderline-ugly chat app?
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