WhatsApp – A victim of Facebook’s poor privacy reputation?
This frustration has been a culmination of all the other privacy issues that Facebook has faced, which includes their war against Apple with regards to privacy. Apple’s new iPhone operating system will soon ask users whether they consent to being tracked by Facebook, something that many users will likely object to because of the legacy of the infamous Cambridge Analytica scandal.
The FTC (Federal Trade Commission) suit alleges that Facebook has been engaging in an anti-competitive acquisition and software development strategy going back nearly a decade and is now in a monopoly position.
More recently Facebook’s social media platform also played a role in the assault on the U.S. Capitol building.
Why did Facebook make this move?
Facebook’s trademark playbook
WhatsApp being remodeled to generate revenue
Never before has an online property been so popular and made so little money. More than two billion people worldwide use WhatsApp regularly to text or make phone calls, but it scarcely generates any money for Facebook, which has owned WhatsApp since 2014.
Facebook does not release separate revenue figures for its various business segments. In the year preceding the acquisition by Facebook (2013), the figure stood at $1.3 Million. This was generated by a $1 per year charge levied by WhatsApp up until early 2016 (with the first year free) in some markets. The charges were scrapped post January 2016. Forbes had predicted that WhatsApp would come to generate revenue of $4 per user by 2020.
Interoperability: “People want to be able to choose which service they use to communicate with people. We want to give people a choice so they can reach their friends across these networks from whichever app they prefer.”
– Mark Zuckerberg (CEO, Facebook)
Impact of the Update across Markets
The decision to improve data tracking for WhatsApp Business indicates that Facebook is allocating more and more resources to products popular outside the U.S. WhatsApp’s popularity in the U.S. has been steadily declining and Facebook seems to know they will have a tough time regaining trust from North American audiences after their recurring privacy concerns.
Relative popularity of messaging apps worldwide
Source: Data collated from We Are Social
WhatsApp’s policy changes signal that Facebook likely believes its time of explosive revenue growth in the U.S. is drawing to a close. Facebook’s revenues in developing markets such as India & Brazil, where WhatsApp is dominant, have skyrocketed in recent years, while its user base in the U.S. and Canada has begun to decline.
WhatsApp’s policy changes indicate that Facebook intends to focus its future efforts on audiences abroad, where it enjoys an overwhelming share of all things internet, and especially in developing markets, where privacy laws aren’t as stringent.
Implications for Marketers
WhatsApp’s privacy woes lead to gain for other messaging apps that will gradually move towards monetization.
Downloads of alternative end-to-end encrypted messaging apps such as Signal and Telegram got a major boost as users looked for a substitute to Facebook-owned WhatsApp. However, these platforms are far behind WhatsApp in terms of their respective life cycle.
This could lead these messaging platforms to introduce premium features for paying customers as part of their move towards a gradual monetization similar to what WhatsApp has done. Telegram plans to bring in special features for businesses and an ad platform for public one-to-many channels.
If the current public conversation around privacy has a lasting effect on WhatsApp’s user base, various apps would need to co-exist.
All messenger apps similar to WhatsApp benefit from the ‘network effect’. Most of the users who are downloading other apps are just testing these apps for now, and not exiting WhatsApp completely yet. Since people are making profiles on multiple apps, there might be a time where we may see various apps co-exist.
End of the monolithic social messaging platforms era and the emergence of co-existing messenger apps and ecosystems.
Brands have been deploying chatbots on WhatsApp to communicate with consumers. If brands notice that a significant chunk of users is moving away from WhatsApp to other platforms, they may deploy chatbots on other messaging platforms as well.
Implications for Privacy and Compliance Professionals
Communicating privacy policies clearly should be prioritized as consumers are becoming more and more aware of their data rights.
Consumers are willing to share more personal information with companies that are more transparent about their data usage.
The privacy efforts of most technology companies are driven by user data security compliance rather than an interest in keeping their users’ data safe and secure. According to Accenture, 73% of consumers are willing to share more personal information with companies that are more transparent about their consumer’s data usage.2
This report was synthesized based on all-inclusive secondary research. Data was collated from syndicated sources and publically available information in analyst reports, news pieces, blogs, and other online sources.