Despite all the features that Facebook has, it can't be everything to everyone, and its brand may not be strong enough in every region of the world for it to compete vigorously. In 2014, the company identified WhatsApp as a direct and serious competitor to Facebook Messenger, particularly in Europe, and it acquired the startup company for about $19 billion.
At the time, WhatsApp (Android, iOS) made money only on a fee of $1. Sometimes it was an annual subscription, but in some cases you could spend a buck and use every feature in perpetuity. So for Facebook to make its money back on such an expensive acquisition, other revenue streams were necessary. Reports in August emerged about Facebook's plans to start monetizing its prized acquisition, and it would take the route that's been so lucrative in its homegrown apps: display ads.
However, it wasn't until a recent interview with Indian newspaper The Economic Times that anyone in the Facebook camp would confirm this story. WhatsApp vice president Chris Daniels told the paper in an email interview that "In the future, we'll place ads in WhatsApp Status, which is our Stories feature. We think this is an appropriate place for ads within WhatsApp. WhatsApp will remain free for people to use, and we remain fully committed to end-to-end encryption."
(With end-to-end encryption, messages are decrypted only on the devices being used to communicate. In some implementations, not even the developer of the app can snoop on this kind of data -- by design. As a result, the users get a much higher degree of privacy.)
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In addition to ads, WhatsApp is also working with businesses to help them interact directly with customers, within the app. Daniels tells The Economic Times, "I believe there are over 50 million small businesses in India. WhatsApp is building tools to help these businesses connect with their customers, respond to questions, and close sales."
If the earlier reports remain accurate, businesses will be charged between half a cent and nine cents for each text they send to a customer, depending on which country they're operating in (separately from display ad fees).
Display ads have become a way of life for Twitter, the Facebook-owned Instagram, and other social media apps. But it remains to be seen how much WhatsApp's 1.5 billion monthly active users will remain engaged if faced with ads in a historically ad-free app.
- WhatsApp vice president told The Economic Times that the company would start placing ads in the Status section "in the future."
- Facebook purchased WhatsApp in 2014 for about $19 billion, initially telling the company to focus on growing its user base.
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