Facebook changes its plans for WhatsApp
When Facebook closed on its purchase of WhatsApp in October of 2014, the purchase price had ballooned to $21.8 billion because of the appreciation in the price of Facebook's shares which were used to buy the messaging app. Even a transaction paid for with stock needs to be accounted for at the end of the day and last May Facebook announced that it would be monetizing WhatsApp this year. Even though the messaging platform has 1.6 billion users, it has yet to make any money for Facebook. A 99 cent annual subscription fee that WhatsApp used to collect was removed from the app after it was acquired by Facebook.
The Wall Street Journal reports that Facebook is moving away from monetizing WhatsApp, at least for now. A team that had been put together to help figure out the best way to run ads on WhatsApp has been disbanded, according to people familiar with the situation. Work done by this team has been removed from WhatsApp's code according to the sources.The Stories-like WhatsApp Status feature was going to be home to full-page ads with the name of the company listed in the spot that normally holds the subscriber's name. A swipe-up link would be included. But
WhatsApp founders Jan Koum and Brian Acton had changed the app's terms of service in 2016 to forbid ads from being displayed in WhatsApp. The pair saw this as a way to get Facebook embroiled in a public relations issue if it ever decided to sell advertising on the messaging service. If Facebook does decide to place ads on WhatsApp, it will have to make sure that all users are alerted. Both Koum and Acton left Facebook in 2018, partly because of the decision made by Facebook to place ads on WhatsApp. The pair had done so well and were in such a hurry to leave that they left a combined $1.3 billion in deferred compensation on the table. In a blog post written in 2012, WhatsApp's founders called ads "insults to your intelligence."
Facebook co-founder and CEO Mark Zuckerberg has said that at the time of the WhatsApp acquisition, he agreed that ads were not a good look for messaging apps. But Facebook eventually changed its position on the matter leading to arguments with Zuckerberg and Facebook Chief Operating Officer Sheryl Sandberg squaring off against Koum and Acton.
WhatsApp was the third most popular messaging app in the U.S. as of last September, the latest data available. Facebook Messenger was on top followed by Snapchap. In the states, WhatsApp is used for person-to-person communications. In developing countries, where WhatsApp is extremely popular, the app is used to conduct business, make sales, and handle customer service. Globally, WhatsApp is the most popular messaging app with 1.6 billion monthly active users. Facebook Messenger is next followed by WeChat.