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How Does WHATSAPP Messenger Makes Money?

Updated: Jan 27, 2019

Social Media has become the need of the world, half of the world would not be able work properly without the services of WhatsApp, Facebook, Instagram etc. It has became a multi-billion dollar business that generates a big pool of money and effects world economy significantly, a clear evidence of the previous statement is evident as the CEO of Facebook, Mark Zuckerberg has a net worth of about $55 Billion.

Today in this blog I am going to tell you how WhatsApp messenger as a free phone application makes money for it’s parent company Facebook and some of the dark secrets associated with the business model of Facebook.

Before diving deep into the discussion let us take a brief look into the history of WhatsApp. This free messaging app was launched in 2009 by Brian Acton and Jan Koum as an altenative to expensive SMS charges. The app allowed users to message anyone who has the app installed at no cost, after the user uploads his contact book. The application when it was running independently under the two founders, was absolutely free, with no downloading or subscription charges.

The First Revenue Model of WhatsApp

In 2014 Facebook bought the WhatsApp for $19 Billion and monetized it. In some countries, the app used to cost about $1 to download. The first year was free and after that the user was asked to renew the services of WhatsApp for $1 every subsequent year, in other words the messaging app had a subscription model.

At the peak under this model it has about 700 million users worldwide; yearly revenue can be estimated as $700 million per year at this time.

This model was widely condemned in Asian countries like India, where most of the people never used the services of WhatsApp after their one year free subscription ended, and WhatsApp’s Indian competitor Hike Messenger was at boom, as it had no subscription or downloading charges.

Current Mysterious Money Making Strategies of WhatsApp

Now the bigger think to ponder about is, usually phone applications earn money in three ways:

By taking downloading charges at the time of app installation. By placing random advertisements in different sections of the application; this is a two way money making strategy:

  • First they earn from their clients who pay them for placing advertisements in the application.

  • Secondly, they earn from users who don’t want to see these advertisements, by providing monetized ad-free services.

  • By taking subscription charges after a fixed interval of time, like Netflix, Amazon Prime and Audible etc.

Okay, that is not the big thing I was talking about, the big thing to ponder about is this, have you ever seen a single advertisement on WhatsApp? Or did you ever saw that WhatsApp is asking you to upgrade to something like their premium pack? I haven’t ever seen anything like this and I hope neither did you.

In January 2016, Facebook revealed in a 10-Q filing that because WhatsApp was monetized in "a very limited fashion," and due this it will never be able to generate meaningful revenue in the long term, hinting that the strategy and revenue model would change. Shortly after WhatsApp announced in a blog post that the era of subscriptions had come to an end, and the messaging app would now be free to use.

No ads, No premium plans, No subscription or downloading charges.

“To paisa aa kaha se raha hai?”

The services of WhatsApp may appeal to you as free but the story is totally different, you give a lot to WhatsApp for their so called “free services” and that is YOUR PERSONAL DATA.

Consider this, by February 2018 WhatsApp had a user base of about 1.5 Billion, about 600 Billion text messages are being sent every day through the messaging app, about 5 Billion photographs are being send by the users of WhatsApp every single day. This much data, the contact list of a billion people, a humungous amount being transferred by you the users, is always under the surveillance of facebook. And if you think Zuckerburg is too naïve to not use this data, then you should reconsider the Controversy of Cambridge Analytica.

Facebook knows everything about you,

  • Whether you’re emotionally stable or not,

  • Which type of content you like or not,

  • They know about your relationship status and family.

  • They know what kind of activities you are doing each and every day,

  • They know things about you that you may not even remember.

  • Even they know about your mental and emotional health. Sometimes you ignore those things but Facebook does not, they maintain the record of all the things in their database that you may consider insignificant.

  • They know what you want and what you don't.

  • They know where, why and when you go, they always follow you (through internet location services, group activities and status updating).

  • Their ad performance is the best in the world, they are selling totally 100% target and interest based ad.

I can take a thousand words to describe you all the things that Facebook and WhatsApp know about your personal and professional life, but Lol, I have other things to do.

Now a few of you might be wondering about WhatsApp’s end to end chat encryption, and the privacy features that are offered to you under it.

So let us discuss about in the next section.

WhatsApp’s End-to-End Encryption Controversy

WhatsApp messenger end to end encryption

WhatsApp Co-founder and CEO Jan Koum resigned on 1st May 2018, over the issues of Data Privacy. And exactly after a week Facebook announced the chat encryption feature in the phone application, which stated that no one except the sender and the receiver to access the data shared among the two parties. You can consider it as facebook’s way of defending the allegations of Jan Koum.

So the question is same again.

How does WhatsApp earns then?

The data mining team at facebook is obviously smarter than the users, WhatsApp was getting data not only from your chat box but, as they introduced the feature of WhatsApp status (some of us call it WhatsApp story) on 24th February 2017, they started extracting data from there too. So even after regulating user security and privacy through End-to-End encryption, WhatsApp was still able to generate profits for facebook.

There are even rumours of advertisements in between WhatsApp stories. So let us see to what extent facebook stretches the business model of WhatsApp for getting the maximum profit out of it.

-Harsh Singh

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