How does Facebook make money from WhatsApp?

WhatsApp is a popular instant messaging and calling app under social media giant Facebook. Since the integration of WhatsApp by Facebook in 2014, WhatsApp has gradually been integrated into Facebook’s ecosystem.

In December 2020, WhatsApp’s head reported on Twitter that 100 billion more messages were being exchanged on WhatsApp every day. However, messaging and calling through WhatsApp requires no subscription or in-app purchase. Also, no third-party ads are displayed like Messenger. So, what is the source of income for WhatsApp?

Table of Contents

Some information about WhatsApp

Although WhatsApp was initially designed to update individual status, it was later launched as an instant messaging app for iOS. In 2010, WhatsApp released a version of its Android app. Since then, WhatsApp has been improving rapidly, and in just two years, its active users have surpassed 100 million, which reached 400 million in December of the following year.

Due to WhatsApp’s simple user interface, end-to-end encryption features, and fast and reliable messaging features, the number of users of the app is increasing every year.

According to Statista, as of July 2021, WhatsApp had more than 2 billion users, and Facebook Messenger had more than 1.3 billion users. On the other hand, the Chinese messenger app WeChat ranks third with over 1.24 billion users.

WhatsApp has the most active users in India. The number of active WhatsApp users here is around 400 million per month.

The first journey of WhatsApp

first journey of WhatsApp

Initially, WhatsApp started the journey through the subscription model. At the time, they charged 99 cents for iPhone users to download WhatsApp. However, with the gradual release of WhatsApp for other platforms, those users could download the app for free and had the opportunity for a free trial in the first year. Then to use WhatsApp from next year, those users had to subscribe for 99 cents. In 2013, WhatsApp brought the same benefits to iPhone users.

Sequoia Capital invested 8 million in 2011 and another 52 million in 2013, given the growing number of WhatsApp users and prospects. In 2014, Facebook bought WhatsApp for 19 billion. Then two most used messenger apps came under Facebook. Then, WhatsApp had more than 450 million users and was growing steadily.

Because of WhatsApp’s subscription model, many thought it would be much more profitable for Facebook. But, when Facebook buys WhatsApp, it makes it completely free. With the integration of this app with Facebook, most users of the world’s instant messaging services are connected to Facebook.

Let’s discuss how WhatsApp makes money.

How does WhatsApp make money?

How does WhatsApp make money?
WhatsApp Income Source

No specific information is known about how WhatsApp makes money. Because Facebook, the leading company of WhatsApp, does not share this information publicly. Some apps like WeChat and Line make money through advertisements, games, online payments, and in-app purchases. But, how and how much money WhatsApp earns is unknown to everyone.

While WhatsApp’s revenue is unknown, it has become one of Facebook’s biggest supporting platforms. Just after which there is Messenger and Instagram.

At first, WhatsApp used to charge 99 cents subscription fee to their users. Although many countries charge for downloading WhatsApp, it is free in some countries (predominantly Asian countries). In addition to downloading the WhatsApp app for free, there was also the opportunity to use it for one year free. After one year of free use of WhatsApp, users were charged 1 dollar.

In 2013, WhatsApp introduced the same policy for iPhone users. On the other hand, the service is free for iPhone users who have already paid for a lifetime. In January 2016, WhatsApp announced the withdrawal of its subscription fee and made the app free.

Facebook has long been accused of using personal data. Many cases have been filed in different countries on this issue. When Facebook bought WhatsApp in 2014, many experts thought that the purpose of purchasing an app without a revenue model for so many dollars might be to collect personal data from WhatsApp users. Facebook collects users’ behavioral data, personal information, location data, and contact list from WhatsApp. This data is then combined with other market data, which creates a clearer picture of a customer’s likes and dislikes. Then use this data to show reliable ads on Facebook.

When signing up for WhatsApp, it takes away access to the user’s contact list, and WhatsApp analyzes those contact lists and finds links to various Facebook accounts. This way, WhatsApp gets an idea about its user’s friends and social life. As a result, they can show more reliable ads by targeting.

Facebook and Instagram collect location data from WhatsApp to show ads by location. In January 2021, WhatsApp introduced a new privacy policy for its users. In this policy, they are asked to allow their users to share device ID, total WhatsApp usage time, and last time online. Also, under their new policy, business organizations can keep conversations logs with their customers and use them in the Facebook Marketplace.

Revenue from WhatsApp data collection

Although most users are unaware of their data privacy, even so, WhatsApp has faced considerable worldwide criticism over this privacy policy.

According to experts, retaining those users in the Facebook ecosystem is more profitable than earning money from subscription fees or any other means. Facebook does not make money directly from WhatsApp here, but they keep those users connected with Facebook.

Data is currently the most valuable asset in the digital industry. The amount of revenue Facebook generates from WhatsApp user data is higher than any other revenue source. For this reason, they have eliminated the subscription fee of WhatsApp and made it more user-friendly. So, everyone uses WhatsApp to communicate with acquaintances.

However, WhatsApp denies that it can collect personal data from users. WhatsApp uses an end-to-end encryption system to exchange messages or calls. But WhatsApp is not an open-source app, and no one but Facebook knows what kind of technology they use to access user information. So, we can’t say anything directly about taking personal information from WhatsApp.

Making Money From WhatsApp Business

In January 2018, WhatsApp launched a separate app called Business. Big companies use this app to serve their customers, and WhatsApp is an effective app for accessible communication with business customers. Also, the ‘WhatsApp Business app has all the features for customers.

Registered businesses of ‘WhatsApp business’ will be able to give the customer’s reply for free within 24 hours; but are charged for a replay after 24 hours, which is a new source of revenue for WhatsApp.

Making money from WhatsApp Pay

In February 2018, WhatsApp launched an in-chat payment service called WhatsApp to pay. However, only Indian users could send money to people on their contact list. WhatsApp has launched a real-time transaction system through 227 banks in partnership with the National Payment Corporation of India.

Facebook launched WhatsApp pay in Brazil in May 2021. Through which transactions can be done between each other and business shopping can be done. Although the ‘WhatsApp pay’ service is provided for free, in case of purchases from Facebook, those businesses have to pay a 3.99% processing fee for accepting customer payments.

Last talk

From all angles, it is clear that WhatsApp is still in the process of investing. WhatsApp is currently adding more users to its platform, which will allow them to generate a massive amount of revenue in the future.

Leave a Comment