The Curious Case of Paid WhatsApp
When WhatsApp Messenger was introduced way back in 2009 it was poor man’s alternative to BBM.
While BBM lost the race a long time back, WhatsApp has since then been acquired by Facebook for a staggering sum of $19B making all its employees millionaires and the two founders billionaires.
As of 2017, WhatsApp boasts of a user base of 1.3B people. Out of that, 1B are active daily. Just take a look at the stats:
WhatsApp is synonymous with communication. It has become a verb. Just like you “Google” it, you also “WhatsApp” it.
When WhatsApp was acquired in 2014, everyone thought that Facebook grossly over paid for a chat messenger. What they did not take into account was that Facebook did not pay only for a chat messenger. Facebook also paid that money for the data.
Remember that Facebook is a social network for only you and me. It’s really an advertising company which makes money only when it shows you ads.
1.3B users generate a lot of data. Some of the data which they won’t share on a Facebook timeline but would easily share it on WhatsApp or Facebook Messenger with a friend.
But that doesn’t explain how WhatsApp will make money off the data?
WhatsApp will not show any ads as the founders were very clear about it. In fact, it was one of the many conditions they put while being acquired.
If WhatsApp charges $1 for a year, it would have $1B in revenues (of course, that’s nothing). But then, users would just switch to so many other messengers available to them (Telegram, Hike, Viber, etc)
So what is this I hear about WhatsApp being charged? What does it mean for me? Do I need to pay?
- WhatsApp is only going to charge businesses.
- WhatsApp is going to remain free for you and me. Unless you are a business enterprise.
Whoa! So businesses can text and call me just like the telemarketing companies? Uh-oh, that ain’t good.
No. Only those businesses can contact you with whom you have initiated a chat. So, if there are 1M businesses registered on WhatsApp, but you reached out to only one business, only they can text/call you. Also, you can choose to block any of them.
What data will the businesses get? Will they read my chats?!
This is where it becomes very interesting…
WhatsApp has said that business chats will be protected with end-to-end encryption. Assuming that WhatsApp will not read your chats, there’s still a ton of data which can help businesses.
- What part of the day is the user active?
- What part of the day is the user most active?
- Average time spent by a user on WhatsApp.
- Average time spent by a user on WhatsApp with individual contacts.
- Names of the groups a user is a part of.
- User about me
- Status update
- Profile photo
- Phone state
- Phone location
It doesn’t make sense to contact a user when he is not using WhatsApp for quite some time. For example, I sleep at 10 PM, messaging me at 11 PM with an offer is not helpful. It might even disturb my sleep due to notification and I bound to be more inconvenienced when a business text disturbs my sleep than a friend. Also, if I am getting messages from people but I come online once to text everyone and then become inactive, maybe I am in office or college.
Similarly, it’s important to not contact me when I am chatting with a particularly close friend (assumed by WhatsApp by analyzing whom I chat with most and how quickly I reply them compared to others.)
The names of the group I am part of also gives information about me. Currently, I am a part of almost 20 groups out which 6 groups give information about. Out of the 6 groups, 2 are about carpooling (here’s an insight about me which can be derived- I like to save money/ I like environment/ I travel every day on the same route, etc), one group is about travelling and tours (another insight — likes traveling/ going on treks/ adventurous, etc)
If I have bothered to change the default WhatsApp about me (Hey there! I am using WhatsApp) it can be useful (Busy/Available/Unavailable/Happy/Sad/Smileys/etc). Same goes with my status updates.
My profile photo can tell you where I have been. If I have Taj Mahal in the background of my image and a group of travels and tours, then it adds more weight to the insight about me of being a traveler.
WhatsApp has end-to-end encryption for all its users. In simple terms, it means this:
You send “Hi, how are you?”
Your friend receives “Hi, how are you?”
Anyone else reading it sees, “HKD32ejiu#4hsehfb23jhKHPPIX1@” or garbage, making it impossible to understand.
Right now, WhatsApp is using Open Whisper Systems Signal protocol for encryption which means no one knows what “HKD32ejiu#4hsehfb23jhKHPPIX1@” means.
Homomorphic encryption allows analyzing encrypted data without the need to decrypt it first. No one is stopping them from switching to homomorphic encryption in future.
Since WhatsApp is owned by Facebook, data from both the companies combined tells a lot about you. Businesses will find this service really useful as they can better target and generate more revenue for themselves and WhatsApp.
And don’t worry, WhatsApp will remain free because the product is you.
Here’s a link to my previous article (On LinkedIn): Is it possible to replace Google?
In this article, I talk about how Google Search works and why it is so accurate and how you can replace Google while at the same time highlight the challenges which you’ll have to overcome.
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