WhatsApp, Facebook and Lies
“I sold my users’ privacy,” said WhatsApp co-founderBrian Acton in a September 2018 interview with Forbes magazine.
On 25 January 2019, we opened our newsfeed and learned that Facebook plans a “unified encrypted backend” for Messenger, WhatsApp, and Instagram. Acton’s Forbes interview, which many of us considered to be sour grapes from an ousted executive, came back to haunt us.
When WhatsApp rolled out end-to-end encryption to their 500 million-plususers in 2014, they brought encryption to the masses. Before this, they were the dirt cheap way to send text messages. After, they became the messaging darling for journalists and politicos. Many of whom used it for confidential communications. Law enforcement agencies, including the FBI, railed against WhatsApp’s encryption and demanded backdoors.
When you hear about WhatsApp messages appearing in a high profile court case, it’s always because the user did something ill-advised. For instance, Paul Manafort decrypted his WhatsApp messages and archived them.
People like Mr. Manfort trusted WhatsApp. It’s cheap and easy-to-use. Their privacy and security spiel is among the best in the business. Everyone forgot one crucial detail.
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Last year, tech journalists practically turned Facebook scandalwatching into a sport. Myanmar, Cambridge Analytica, the not-secret secret delete button for Zuckerberg’s messages, it felt like there was a new Facebook blunder every week.
Is WhatsApp as independent as they claim, or does trusting WhatsApp mean trusting Facebook?
The Uncomfortable True Story of the Facebook-WhatsApp Acquisition
When Facebook announced its acquisition of WhatsApp on 19 February 2014 for $16 billion (US), their stock fell 5%. Their investors, still reeling from sticker shock, began questioning the mismatch between WhatsApp’s ad-free pledge and Facebook, which at the time generated 89% of its revenue from ads. On the surface, WhatsApp looked like a bad investment.
The Wall Street Journal later learned that Onavo, a VPN app maker and Facebook subsidiary, possessed data revealing that WhatsApp was installedon 99% of all Spanish Android phones. WhatsApp changed a country’s mobile communication patterns. No wonder Facebook, which was struggling with mobile ad monetization at the time, wanted in.
Facebook and WhatsApp kicked off their unlikely partnership by lying to the European Commission. When asked whether Facebook and WhatsApp would combine their user data, executives claimed this was technically impossible because WhatsApp used phone numbers, not Facebook user IDs.
Then, in August 2016, WhatsApp began officially sharing user data, including personal phone numbers, with Facebook. On 18 May 2017, the EC fined Facebook€110 millionfor “providing misleading information.”
In exchange for a fineworth less than 1% of the final deal’s value, WhatsApp’s co-founders both became overnight billionaires. Facebook’s infamous algorithm finally had its missing piece—millions of verified mobile phone numbers along with country and carrier codes, screen resolution, and device identifier information.
WhatsApp’s independence pledge to its users died on the negotiating table. They just forgot to tell you.
How Facebook’s Gamble Paid Off
Before acquiring WhatsApp, Facebook boasted $2 average revenue per user worldwide with 89% of total revenues from ads. By the close of 2017, after they injected WhatsApp’s user data into their algorithm, this increased to $6.18 and ad revenues comprised 98% of the total.
Today, WhatsApp and Facebook Messenger have over 2.8 billion monthly active users between them. That’s more than their top five competitors combined. Their initialWhatsApp gamble helped Facebook transform their revenue stream and become the dominant messaging app provider.
WhatsApp is Facebook.
WhatsApp’s Coming Changes
As 2019 dawned, Facebook faced a new challenge—declining user growth and engagement on the main Facebook app, which suggests they are nearing market saturation in developed countries. With their main earner’s future growth now limited, they must monetize their other assets, including WhatsApp.
Although they’re already charging business users for WhatsApp messages, this year Facebook plans to roll out targeted ads on WhatsApp Status. Logically, this monetization strategy requires the unified encrypted backend for Facebook Messenger, WhatsApp, and Instagram that shook the tech world in early February.
Despite WhatsApp’s claims of independence, the company has consistently supported Facebook’s monetization efforts. First by handing over their user data and now with a monetization strategy that closely mirrors that employed by Facebook Messenger—ads, ads, and more ads. The hiring of Matt Idema, a former Facebook executive tasked with product marketing, foreshadowed WhatsApp’s newfound emphasis on ad revenues. Acton and Jan Koum, WhatsApp’s co-founders, have both left the company following disputes with Facebook executives over monetization strategies, data security, and data privacy.
Given the close ties between WhatsApp and Facebook, you cannot trust one without trusting the other. Once they transition to a common backend, the main difference between the two messaging platforms will be their color scheme.
Facebook and WhatsApp built their partnership on broken pledges, lies, and a business model that exploits private user data for ad revenue. Can you trust WhatsApp with your sensitive communications and your customers’ personal data?