WhatsApp has 900 million users, but does it have a business plan?
WhatsApp cofounder Jan Koum announced on Friday that the messaging service has reached 900 million monthly active users. WhatsApp doesn't have ads, and doesn't collect data from users – so how does it plan to make money?
Facebook announced back in 2012 that it had reached 1 billion active users – and now Facebook’s subsidiary WhatsApp is poised to reach the same milestone.
WhatsApp cofounder Jan Koum announced in a Facebook post that the messaging service now has 900 million monthly active users, up from 700 million in January 2015.
Facebook purchased WhatsApp for $19 billion last year, when WhatsApp had about half as many users as it does today. At the time, Facebook chief executive officer Mark Zuckerberg wrote in a press release that “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable.” The deal was one of Silicon Valley’s biggest acquisitions ever, which was why business analysts found it a little strange that WhatsApp didn’t really have a business model.
For a time, WhatsApp charged users $1 per year for the service, with the first year free, but the company dropped that model after Facebook acquired it. Both Mr. Koum and Mr. Zuckerberg have said that WhatsApp won’t carry advertising. The app itself doesn’t collect user data the way Facebook does (WhatsApp doesn’t log name, gender, or age, and it deletes messages from its servers once they’re delivered) so the company can’t get a kickback from advertisers for selling information about its subscribers.
During an earnings call in February 2014, Zuckerberg explained that once WhatsApp reaches a billion or more users, “there are many clear ways that we can monetize.” During the same call Koum said that “we’re not really concerned about monetization today,” noting that the company was focused exclusively on growth.
WhatsApp’s business model may come to resemble that of Facebook’s own Messenger service, which doesn’t carry ads but is aimed at connecting consumers with brands as well as with each other. Facebook’s new “M” concierge application also connects users with commercial services such as buying items, delivering gifts, booking appointments, and making travel arrangements. WhatsApp could eventually be rolled into that ecosystem, extending the reach of Facebook’s other brand-centered services.
WhatsApp might also revert back to a subscription model. $1 per year isn’t much, but it adds up to significant cash if the service has a billion or more users. The company might also add features to resemble other messaging apps, particularly those in Asia, that act as full-blown consumer ecosystems by letting users transfer money, order food, and even hail taxis. WhatsApp has already added new features to its core text-messaging service, including free voice calls in the vein of Skype.