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Utilitarian Ethics

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Leaders make rational decisions every day in the effect to maximize the benefits and minimize the costs for themselves and everyone affected by it. These leaders just as often make decisions based on emotions, opportunities, present states of condition, and other factors, which are considered irrational decisions. People have the natural desire to be correct without weighing the consequences. One recent example of a company that has been criticized for potentially making a very irrational decision is Facebook. CEO, Mark Zuckerberg, announced that he is buying WhatsApp for 16 Billion in cash and stock, along with another 3 over a couple years, making it a 19 Billion dollar deal for the company. WhatsApp is a leading chat app that has grown quickly in the last few years. It allows people to send video, photos, and text messages. It is more popular in many countries outside of the United States. The app will also not promote any ads for users. The deal’s enormous price tag brings a lot of question into Zuckerberg’s rationale behind his decision and if the pros outweigh the cons. Consequentialism is focused on the basic consequences that come with decisions and determining net balance between the good consequences and the bad ones. Zuckerberg’s decision to buy WhatsApp is consistent with his goal of connecting the entire world, especially developing countries, through technology. The app has over 450 million users. There almost as many messages sent using the app as there are text messages sent in the entire world per year. It allows Facebook to improve the app and help people from all over the world to share information quickly and efficiently. Utilitarian ethics revolves around maximizing net benefits for all parties involved with the decision, which brings the question, is the 19 billion dollar cost for the acquisition able to maximize the net benefits in the future for Facebook and all of its shareholders. One of Facebook’s barriers in connecting the world is that internet is required to access the site, where WhatsApp does not require internet to use, making it accessible to many developing countries. The acquisition also eliminates google from snatching it up and other aggressive competitors in the market from buying it. Facebook also expands from connecting with people you already know using personal status updates, to a much more vast interaction capabilities using WhatsApp. The app is fairly cheap to use at $1 a year for the service, which will make Facebook’s first paid product. The main goal of WhatsApp is to connect 1 Billion people. The two companies will remain two separate entities, which brings out a potentially harmful problem for Facebook. If this app can reach its 1 Billion user target, it could reduce a lot of interest for Facebook. Also, the app will most likely require a Facebook login, along with more personal information such as your phone number, which some people will not feel comfortable with. The market did not exactly respond well to the acquisition either, dropping Facebook’s stock by 3.7 percent. Without advertising, it is unclear how they are going to make a profit, making the 19 Billion seem even more unreasonable. I think that Zuckerberg was acting desperate and irrational when making the deal considering the outrageous cost and the unclear strategy in drawing revenue from it. I believe he substantially overpaid with the intention to buy up a company that has a lot of users. From a utilitarian approach, he is not maximizing benefits and minimizing costs as of right now. On the other hand, he is creating opportunities to expand his company’s original mission of globally connecting the world. He has also left a lot more room for growth with this expansion into unique frontiers of communication with WhatsApp. While keeping this mission in mind, it is also important to maximize benefits for everyone involved, including shareholders in the company by reducing costs and investing in projects that show positive potential revenues. Ultimately, I believe Zuckerberg succeeded in his goal to make the world a smaller place through technology which benefits the entire world’s users, but the 19 Billion dollar deal an irrational decision that may not play out in his favor.

I acquired my information from the Financial Times, Digital Spy and personal knowledge from using the app.

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