WhatsApp Goes Full Facebook
With WhatsApp’s new Business API, Facebook enters profit taking mode with its $19 billion acquisition.
PHOTO CREDIT: Getty Images
(This is a guest post from Appilco Head of Platform and Modern Monopolies co-author Nicholas Johnson.)
This week, the dream for what WhatsApp could have been was officially pronounced dead. What happened? Facebook announced a host of new business-oriented features that are coming to WhatsApp in a push to finally have its biggest acquisition generate meaningful revenue. Ads are included, contrary to the original vision for WhatsApp, whose founders once called advertising an "insult to your intelligence."
As I've written previously, WhatsApp's original direction presented an opportunity for a true Facebook competitor to emerge. But since Facebook's $19 billion acquisition, it's become increasingly clear that WhatsApp will inevitably end up looking like yet-another Facebook platform. That is to say, it will be driven by ads and the mass collection of user data, as required by Facebook's main revenue model.
With the WhatsApp Business API, this transition has kicked into high gear.
Show Me the Money
WhatsApp's business API will enable businesses to establish an official presence on WhatsApp, similar to how they exist on Facebook today. However, this doesn't mean you're suddenly going to start getting spammed by messages from companies, as customers still have to contact a business on WhatsApp first before the business can send them messages.
After that, using the API, businesses can respond to messages from customers. They can also send them updates such as order confirmations, delivery notices, appointment reminders and more. Many businesses will also use it for customer support, and the API will likely enable WhatsApp to plug into existing CRM solutions that businesses use for that purpose.
As for cost, the API will let businesses respond to customer inquiries for free within 24 hours. After that they will pay a fee per message sent of between half a penny to 9 cents, depending on the country. This framework will encourage businesses to respond to customer messages quickly. It also helps eliminate the incentive for businesses to spam customers after the initial outreach, as each message will cost them money. If that message doesn't create real value for the customer, you won't want to send it.
Additionally, WhatsApp will also be introducing ads, not all of which will appear within the WhatsApp app itself. How does that work? Business accounts on WhatsApp will soon be able to place ads on Facebook (and likely Instagram too) that let customers click to open up a WhatsApp message with that business. Additionally, WhatsApp will be adding advertisements to its Status platform, which is its version of Facebook's many Snapchat Stories clones. Facebook has been testing these ads already with Instagram Stories, and WhatsApp Status ads will tie into the same Facebook ad system as Stories.
Facebook's Stalling Revenue Engine
Taken together, these moves remove much of what made WhatsApp stand out from the rest of the Facebook ecosystem. Following the departure of WhatsApp's founders, every new change makes WhatsApp more and more like Facebook.
At its core, Facebook, much like Google, is driven by a giant money-making advertising engine. Eventually, everything that Facebook touches gets pulled into its vortex. Now WhatsApp, despite promises to the contrary to both users and regulators, will be no different.
For Facebook, the shift comes on the back of a poor showing in its latest quarterly earnings and as increasing investments in safety and community monitoring are likely to compress its profit margins in the years ahead. Facebook appears to be moving decidedly out of growth mode and into profit-taking mode with all of its platforms. Now that WhatsApp is one of the largest messaging platforms in the world, it's well positioned to turn into the monetization engine Facebook likely envisioned when it shelled out $19 billion.