WhatsApp Flips The Switch

Whatsapp Monetization Finimize

Image source: Twin Design / Shutterstock.com

What's going on?

WhatsApp, the popular messaging app owned by Facebook, announced changes to its terms and privacy conditions on Thursday that are aimed at allowing businesses to interact with… you!

What does this mean?

Facebook bought WhatsApp in 2014 for $22 billion, but it’s largely left the company to operate as a standalone entity: this is the first time that WhatsApp’s terms have changed since Facebook bought it. The changes will allow businesses to communicate with WhatsApp’s users. For example, your bank might contact you about a fraudulent transaction or your airline about a delayed flight. But it’s a two-way street: WhatsApp will also connect your phone number with Facebook’s systems so that Facebook can “show you more relevant ads if you have an account with them.”

Why should I care?

For the stock: This is Facebook monetizing its $22 billion acquisition of WhatsApp.
Mark Zuckerberg has been patient with WhatsApp, allowing it to focus on growing its user base from about 400 million when Facebook acquired it to over 1 billion users today. Now, in Facebook’s view, is the time to turn on the money tap (this isn’t a surprise for investors: Facebook outlined plans to start monetizing its messaging services earlier this year). Facebook’s stock price is likely already reflecting some future revenue from its messaging services – the question is how successful its efforts will be.

The bigger picture: Facebook isn’t exactly a pioneer in the messaging space.

Japan-based Line, which became a publicly traded company earlier this year, and China’s WeChat are already making tons of money via their messaging apps. Facebook’s plans are still pretty vague, so it’s not clear how closely they will copy their (mainly) Asia-focused peers.

Originally posted as part of the Finimize daily email.

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