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WhatsApp’s Privacy Update Fiasco and Implications for Marketers and Privacy Professionals

By Vineeth Thomas & Arijit Bhattacharya

The messaging platform WhatsApp, which has over two billion users globally, recently announced an update to its privacy policy. The new policy will chiefly impact the way user data is treated when there is an interaction with a business account and user data integration with Facebook, WhatsApp’s parent company. This move has raised widespread privacy-related concerns and criticism of WhatsApp, with several users exploring alternative messaging platforms like Signal and Telegram.

What’s the unrest around WhatsApp’s new privacy policy?

On January 4, when WhatsApp announced the update in the privacy policy, the sense of being subject to forced consent made users uneasy, even angry. “#WhatsApp” began to trend on Twitter as users and reporters globally slammed Facebook too for its lack of transparency. WhatsApp’s press release didn’t fully explain what the update really meant, and as users discovered that they didn’t have an option to opt out of the data collection, some began to delete their accounts. WhatsApp executives then took to Twitter to explain the policy changes in order to cut through the confusion.

A semblance of forced consent – Prior to the latest update, existing users were provided with the option to choose not to have their WhatsApp account information shared with Facebook. With this policy update, users will no longer.
Panic Grips WhatsApp Users Over Privacy

WhatsApp – A victim of Facebook’s poor privacy reputation?

Due to the social media outrage, WhatsApp was forced to delay implementation of their recent update for its privacy policy. The matter raised concerns about the privacy of chat messages and profile data, and led users to shift to other encrypted messaging apps such as Signal, Telegram et al.

WhatsApp became 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

Facebook’s trademark playbook
Facebook is trying to use its trademark playbook to remake WhatsApp into a compelling way for people and businesses to interact.

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.

Key changes in WhatsApp’s proposed privacy policy update

Key changes in WhatsApp’s proposed privacy policy update
Mark Zuckerberg (CEO, Facebook)

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.

While WhatsApp’s user base in home turf North America has been declining, the app is wildly popular abroad.
Relative popularity of messaging apps worldwide

Relative popularity of messaging apps worldwide
Source: Data collated from We Are Social

In the U.S. and Canada regions, Facebook’s daily active user base fell by 2 million from 198 million in Q2 2020 to 196 million in Q3 2020.1

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.

Privacy is a top priority for a lot of consumers. In this case, Facebook’s previous setbacks with privacy concerns have fueled customers’ outrage towards WhatsApp’s policy change. The privacy policy announcement was a case study in poor communication with the public and the cumulative effects of breaking promises to users.

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

Research Methodology

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.


Citations:

1. https://www.businessinsider.in/
2. https://www.marketingdive.com/

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Vineeth Thomas

Vineeth Thomas

Vineeth is a trusted insight partner with 12 years of experience working for some of the world’s biggest technology companies and leading brands, connecting data,...
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