How Does WhatsApp Make Money ?

In the previous article, we discussed about Evolution of  WhatsApp. If you haven’t read that article, CLICK HERE to read. Today, let’s talk about how WhatsApp makes money. Initially, Jan Koum and Brian Acton, the creators of WhatsApp, got some money. Their success prompted additional firms to invest in them. They would pay them money in return for their shares. However, the investments needed to come in. They developed a new business strategy to do this. Then WhatsApp began charging users $0.99, or around $1 per year, to use the service. You heard it right: WhatsApp was no longer free. They began charging $1.

Despite this, WhatsApp’s user experience was excellent, and the program ran swiftly; in addition, new capabilities were added, such as the ability to transmit photographs over WhatsApp. Their expansion continues. By 2011, their software had become the most popular on the AppStore. Acton was clear on one thing. He had placed a message on his table. “No advertisements! No games! “No Tricks!” He did not want to run adverts on WhatsApp, nor did he want to create features that had no use. He intended to make the app basic and to the point. The application is designed for messaging. He wanted the app to excel in one area such that no other software could compete. Their $1 Business Model was very successful.

Within three years, WhatsApp had become profitable. They invested all of their earnings on their little staff. This allows for the addition of additional features to WhatsApp. The difficulties with the program might be fixed. And dependable texting software might be developed. They said that their product was their passion and that user data did not interest them. They had no interest in collecting user information.

However, Facebook makes an appearance later in the novel. And this model began to crumble from here. Mark Zuckerberg has been attempting to acquire WhatsApp since 2012. However, this agreement was concluded in February 2014. Facebook acquired WhatsApp for $19 billion. Employees who formerly worked for WhatsApp have now joined Facebook.

The WhatsApp founders also met with Sundar Pichai, the CEO of Google. WhatsApp was Facebook Messenger’s main competition. By 2014, numerous new texting apps have emerged in a round.Like WeChat, Kik, Line, and Viber. Facebook intended to acquire WhatsApp so there would be no serious competition if they owned both Facebook Messenger and WhatsApp. Aside from that, WhatsApp gained access to a large amount of user data. Facebook understood that they could utilize this user data to make more money because Facebook’s business is based on data sales.

Following this deal, WhatsApp’s creators, Acton and Koum, became billionaires overnight. If you’re wondering why they sold WhatsApp, it’s because Facebook and Mark Zuckerberg promised them that they would be able to manage it independently even after the acquisition. That there would be no disruption to their job. So they agreed to sell it. It is a decent deal. They obtain the money without compromising their ideals. However, there is no happy ending to this narrative since Facebook and WhatsApp had frequent disagreements in the years that followed.

In January 2016, we heard that WhatsApp has dropped its $1 price.WhatsApp reverted to being entirely free. The reason behind this is because in many countries, including India, individuals do not have credit cards. They were unable to pay the $1 charge, which many individuals could not afford. In this situation, making this a free software helps to build a larger user base, thus they determined that if they wanted to expand and have more users, they needed to make the app free.

Now, the question arose: What should the business model be? How does WhatsApp make money?

During this period, WhatsApp would strive to form agreements with businesses to generate income. At the same time, Mark Zuckerberg was under pressure from his investors after WhatsApp received $19 billion. So they needed to generate some money from it somehow. They had to justify the acquisition and demonstrate that it was lucrative. They had to make WhatsApp lucrative rapidly so that they could generate more money from it.

In turn, Mark put pressure on WhatsApp’s creators. The WhatsApp founders were fed up with this and gave up in March 2017; they couldn’t handle it any longer. Brian Acton resigned from his position in September 2017. A few months later, Jan Koum also quit WhatsApp. He stated that he does not agree with Facebook’s position on data privacy or the economic model that Facebook wishes to impose on WhatsApp. And that he could not accept them in any way. And so he left WhatsApp.

Friends, after 2018, Mark Zuckerberg took control of WhatsApp. Brian Acton went on to found the non-profit Signal Foundation. With this, we received the new texting app Signal. As you are aware, many people compare Signal to WhatsApp. Signal is a superior app in many ways. It preserves your data privacy and is a free software like WhatsApp. Most significantly, it is a nonprofit application. Brian chose this time not to become involved in Business Models since they always had to sacrifice the company’s beliefs in order to make a profit. That’s why Signal would remain a non-profit app; they wouldn’t worry about making money, would ensure the users’ data privacy, and would provide the users with a genuinely free messaging app. 

So what happened to WhatsApp then? What was the Business Model that Mark Zuckerberg cooked up?

In 2018, Facebook released the WhatsApp Business app. Businesses may use this app to construct their business profiles. Additionally, verified firms can link their websites and Facebook pages to this company profile. Facebook created a connection between Facebook pages and WhatsApp. People can utilize the link from their company profiles to access Facebook. They devised an effective method for advertising on Facebook. New users who view company profiles may now easily get to the Facebook page with a single click.

Although the WhatsApp Business app is completely free to use, the Business API is WhatsApp’s primary source of revenue. The term “API” refers to the Application Programming Interface. It is a means via which numerous apps may communicate with one another. Alternatively, execute a function or duty. WhatsApp is selling its API to companies. Businesses may use WhatsApp to communicate with clients and automatically answer inquiries. However, if they utilize WhatsApp’s API, companies can send shipment confirmations, and appointment reminders, and even sell event tickets to their clients. The fees are calculated differently for different countries. You might ask about the businesses that choose to use these services. Friends, the answer to it is the companies that deal with millions of customers, like airline tickets, travel tickets, movie tickets, or large banks.

As a result, WhatsApp Business API users are large businesses. The customers include Singapore Airlines, Booking.com, Uber, MakeMyTrip, and Netflix. Friends, Facebook did not stop here. Facebook is exploring for new methods to generate money from WhatsApp. That is why they have included the opportunity to make payments. However, regular users will be able to utilize WhatsApp Pay for free. However, firms would be required to pay a fixed charge of 3.99% on each transaction.

Aside from that, Facebook is considering introducing advertisements on WhatsApp to increase its revenue.It is intended that WhatsApp statuses will ultimately include advertisements.Friends, we don’t have specific information on the entire money that WhatsApp produces for Facebook.Because WhatsApp is part of Facebook’s business, Facebook does not provide an extra income breakdown for WhatsApp. Forbes published an estimate in 2017, when WhatsApp had 1.3 billion users. They projected that WhatsApp’s average income per user might range from $4 to $12.

As a result, WhatsApp has evolved into a product that can be used to buy and sell items, make payments, and maybe display advertisements in the future. But I hope you found the tale of WhatsApp intriguing. Also informative. Let us meet in the following articles.