Unraveling WhatsApp Revenue Model: A Crypto Perspective

• Transformation in Mobile Communication: A Focus on WhatsApp
• The Evolution of WhatsApp
• WhatsApp's Acquisition by Facebook
• WhatsApp's Revenue Models
• The $1 Model
• Revenue Plan: No Ads or Subscriptions
• The Current Revenue Model and the Future

Transformation in Mobile Communication: A Focus on WhatsApp

Over the past decade, mobile communication has undergone a significant transformation. Initially, this industry solely depended on mobile service providers and text messaging. However, the development of various messaging models has expanded this communication landscape. WhatsApp is one of these popular models that has redefined mobile communication. The app was introduced in 2009 by Jan Koum and Brian Acton as an alternative to expensive SMS services. Today, it ranks as one of the most widely used messaging apps, despite being free for users. This article delves into the history of WhatsApp, including its acquisition by Meta, and the app's business model.

The Evolution of WhatsApp

The creator-duo, Jan Koum and Brian Acton, introduced WhatsApp in 2009. Today, the app has become a leading messaging platform with about 2 billion monthly users as of 2023. This user base surpasses other online messaging services, such as Facebook Messenger. WhatsApp allows users to call or message contacts in their list. Its usage and functionality significantly changed in 2018 when Meta, formerly known as Facebook, acquired the application.

WhatsApp's acquisition by Meta made headlines, with the deal closing in February 2014 for a whopping $19 billion. This massive purchase has played a significant role in understanding the revenue model of WhatsApp and its history.

WhatsApp's Acquisition by Facebook

WhatsApp's acquisition by Meta was officially announced in 2014. Post-acquisition, WhatsApp generated $1.29 million in revenue for Meta by the end of September 2014. Despite the founders, Kuom and Acton, continuing with the company post-acquisition, changes began to occur, especially concerning the app's revenue model.

In 2018, Kuom, who had become a Facebook Inc. director, decided to leave the company. This decision was reportedly due to disagreements over the use of user data and the introduction of advertisements on the platform. Despite these changes, WhatsApp remains Meta's second-largest property and the most used messaging service across all of Meta's platforms, including Instagram and Facebook.

WhatsApp's Revenue Models

The $1 Model

In its early days, WhatsApp made money through a subscription model. Users could use the app for free during the first year but had to pay a $1 annual fee thereafter. This model was in place while the app had about 700 million users, which roughly translates to an estimated annual revenue of $700 million. However, under Meta's leadership in 2016, this model changed as it was said that WhatsApp was not generating meaningful long-term revenue.

Consequently, Meta announced that the app would no longer require a $1 fee and would be free to use. This brought up the question, how does WhatsApp make money without subscriptions and ads?

Revenue Plan: No Ads or Subscriptions

In a 2016 blog post, WhatsApp announced that it would no longer be charging users and would not feature ads on its platform. The company hinted at testing tools that would allow users to communicate with businesses and organizations via WhatsApp. This meant users could discuss transactions with banks or discuss delayed flights with airlines, all within the WhatsApp platform.

This strategy was aimed at generating revenue while avoiding ads and subscription fees. The business model relied on consumers' ability to communicate with businesses on the app, leading to potential revenue from the participating businesses. This plan was part of Meta's aim to make WhatsApp free and more useful.

The Current Revenue Model and the Future

As of now, WhatsApp does not feature any subscription model or advertisements. However, the company has mentioned its plan to introduce limited ads to the platform and has implemented a WhatsApp Pay feature. This service enables users to send money to other users' bank accounts, allowing WhatsApp to venture into the profitable digital payment sector. This feature presents a clear opportunity for generating revenue within the app.

Edited by Jonathan Stoker