WhatsApp is a very popular messaging app. It’s one of the first truly end-to-end encrypted messaging apps. Users love it for its no ad policy and security. There is no third party and all messages are stored on the user’s device. Nothing stays in WhatsApp’s servers. This year, however, Facebook might start showing ads on WhatsApp.

WhatsApp’s Acquisition

WhatsApp was launched in 2009 by founders Brian Actom and Jan Koum. In 2014, Facebook saw WhatsApp as a threat and bought it for a staggering price of $19 billion USD. WhatsApp had a simple revenue model – the app generated income through a $1 annual subscription. The $1 subscription plan was canceled after Facebook took over. It became a totally free messaging app.

How did Facebook justify spending such a large amount of money for a simple messaging app? WhatsApp growth was becoming a threat to Messenger. Its growth outpaced other apps such as Tumblr, Foursquare, Vine, and Google+. If they didn’t act, they’d probably be faced with a major competitor for their Messenger app. So to stop the threat, they had to take over WhatsApp. Convincing the owners to sell was not easy without a deal of a lifetime. Thus the 19 billion US dollars. Facebook was playing a long game and they had probably already figured out how to recover their investment.

WhatsApp

WhatsApp has approximately 1.5 billion users.

WhatsApp has 1.5 billion users, a huge advertising potential. Zuckerberg’s fortunes are about to turn in his favor now that WhatsApp will start displaying ads soon. Statistics show that WhatsApp has 450 million daily active users who make 100 million voice calls and send 65 billion messages each day. Also, there are at least 3 million companies using WhatsApp for business.

A Betrayal to WhatsApp’s Founding Ethos?

Is showing ads going to break users’ patronage? It remains to be seen. WhatsApp was founded with a no ads ethos. The move to open WhatsApp to advertisers goes against the founding values. Both Brian Acton, and Jan Koum, who are strongly against target advertising, left the app in 2017 over privacy and data concerns.

There are concerns about the privacy of user’s data. A spokesperson for WhatsApp said that ads would be displayed in the Status feature, although messages will still remain end-to-end encrypted. This feature will allow Facebook to monetize the app. No matter how they spin the story, this breaks the promise made at the very inception of WhatsApp to never accept ads on their platform.

Privacy Concerns

WhatsApp may face a conundrum of privacy issues in the bid to monetize the app. The European General Data Protection Regulation, which took effect on May 25, 2018, will bite. GDPR affects all enterprises who hold and process data for users residing within the EU. This law applies globally. All businesses located outside the EU and offering products and services to EU users have to comply. In order for advertising to work on WhatsApp, it would require the transfer of user data to locations outside the EU for EU residents.i

Here are some of the points of concern.

Right to access

Right to access is the principle that users may obtain confirmation from the data controller on whether or not their personal data is being processed, where it is, and for what purpose. If an enterprise uses WhatsApp for Business, its address book is automatically linked to WhatsApp and thus Facebook. Because of that, the enterprise cannot really explain if or not personal data of clients is being processed.

Right to be forgotten

Users are entitled to have data controllers to erase her personal data, cease dissemination or processing of data concerning the user. With WhatsApp, this cannot be enforced.

Privacy by design

This concept demands the inclusion of data protection from the very beginning of the designing process of a system. Uploading and storing of an address book in WhatsApp does not meet the “privacy by design” principle of EU GDPR.

Data portability

This allows users to transfer data from one company to another. With WhatsApp, this is impossible. Personal data of a customer is basically locked up in WhatsApp.

Conclusion

As apps mature, monetization becomes a topic for continuity. If an app cannot generate an income, then the owners may go out of business. The problem is that most apps only have personal data. And they are willing to sell user’s data in order to continue providing their services. How much of that data and to what extent is ethical remains a subject of debate.

What are your thoughts about this upcoming move?

Mwenge Ngona

Mwenge Ngona

Head of Marketing at Andromo. Without marketing, we would never know anything about anything. Think about that. We'd be missing out on life!