WhatsApp Profits

Facebook’s purchase of WhatsApp made sense in terms to buying a potential competitor before it got too large to threaten Facebook’s understanding of social relationships. The decision to secure communications between WhatsApp users only solidified Facebook’s position that it was less interested in mining the content of communications than on understanding the relationships between each user.

However, as businesses turn to WhatsApp to communicate with their customers a new revenue opportunity has opened for Facebook: compelling businesses to pay some kind of a fee to continue using the service for commercial communications.

WhatsApp will eventually charge companies to use some future features in the two free business tools it started testing this summer, WhatsApp’s chief operating officer, Matt Idema, said in an interview.

The new tools, which help businesses from local bakeries to global airlines talk to customers over the app, reflect a different approach to monetization than other Facebook products, which rely on advertising.

This is Facebook flipping who ‘pays’ for using WhatsApp. Whereas in the past customers paid a small yearly fee, now customers will get it free and businesses will be charged to use it. It remains to be seen, however, whether WhatsApp is ‘sticky’ enough for consumers to genuinely expect businesses to use it for customer communications. Further, Facebook’s payment model will also stand as a contrast between WhatsApp and its Asian competitors, such as LINE and WeChat, which have transformed their messaging platforms into whole social networks that can also be used for robust commercial transactions. Is this the beginning of an equivalent pivot on Facebook’s part or are they, instead, trying out an entirely separate business model in the hopes of not canibalizing Facebook itself?