10 years after purchase by Facebook: WhatsApp is still WhatsApp
When Facebook decided to buy WhatsApp, there was a lot of concern. But the chat service remained ad-free and easy to use. However, the opportunity for an alternative business model on the internet was lost.
Behind the WhatsApp logo, which can be found on more than two billion smartphones, lies one of the more exciting what-if questions in the tech industry. What if the founders and financial backers of the chat service had resisted the temptation of a 19 billion dollar purchase offer from Facebook ten years ago?
Would the service have gone under in competition with the tech giants? Or would the business model with a one-dollar subscription fee per year have established itself as the alternative to free services where you are inundated with personalized advertising?
WhatsApp remains unmistakable
Immediately after the deal was announced on February 19, 2014, there were concerns from users that the service could change fundamentally under Facebook's direction. After all, doesn't the money spent have to be earned back somehow? And by the time the takeover was completed in October 2014, the purchase price had swelled to almost 22 billion dollars - a large proportion of which was paid in Facebook shares, which had risen in price.
Ten years later, WhatsApp is still unmistakably WhatsApp. There are no ads, the app is tied to a phone number instead of a profile. And all messages are protected with end-to-end encryption, which ensures that they are only visible in plain text on the devices of the users involved, but not to the service.
The right SMS alternative at the right time
When Facebook decided to buy WhatsApp, the service still had around 450 million users. And more traditional text messages were actually being sent than chat messages. Today, it is unimaginable to pay money per individual message - back then, mobile phone providers were just coming to terms with the fact that they would lose this once lucrative source of money.
WhatsApp proved to be the right SMS alternative at the right time. Even smartphone newcomers were not put off by its ease of use. And the service built a bridge between iPhones and phones with Google's Android system. Apple's iMessage chat service is only available on the company's devices - and there was a need for a cross-platform solution.
US competition lawsuit still pending
WhatsApp was only launched in 2009. The two co-founders Jan Koum and Brian Acton had worked at the then internet heavyweight Yahoo and then wanted to try their hand at their own start-up.
Facebook became aware of the service via the VPN app Onavo, which it had purchased and which the company used to identify trends in user habits. The explosive growth of WhatsApp observed in this way may have been one explanation for the sensational purchase price.
In a competition lawsuit, the US government accuses Facebook of simply buying a competitor off the market before it could pose a threat to the company. It has brought up the possibility of spinning off the service. The trial is still pending.
Companies should pay money
Meanwhile, the Facebook group Meta believes it has found a way to finally make money with WhatsApp. Facebook quickly dropped the subscription fee of one dollar after the takeover. Nothing will change for users, but companies will pay money to communicate with their customers via WhatsApp.
In the past quarter, Meta's app revenue outside of the advertising business jumped by 82%, mainly thanks to the WhatsApp business platform. However, at 334 million dollars, they accounted for just 0.8 percent of the Group's total revenue.
Founder no longer involved
Founders Koum and Acton only stayed at WhatsApp for a few years after the takeover. Koum announced that he would now take some time out to do things outside the technology industry, "for example collecting rare air-cooled Porsche cars" - and largely disappeared from the scene. Meanwhile, Acton invested in the chat app Signal, whose encryption technology is now also used by WhatsApp.
Signal also recently provided proof that WhatsApp's original business model could have worked out. The chat service, which is financed by donations such as Acton's, estimated that it would need around 50 million dollars for development and operation in the coming year. Even with just one dollar per user, WhatsApp would have earned many times that amount. (SDA/Focus)
