The landscape of mobile communication has certainly changed over the last decade. What once was a business that solely relied on text messaging and mobile service providers has greatly expanded to a host of messaging models. Within this guide, we are going to explore one of the most popular WhatsApp and discuss how the messaging app makes money.
The application first came into existence in 2009, being founded by the duo of Brian Acton and Jan Koum. Moreover, the product was created as an alternative to those rather expensive SMS offerings. Now, almost 15 years since its first launch, the product has become one of the most widely used messaging apps. Yet, it is available for use at no cost.
However, amid the currency technology landscape, operating for free from users is a rarity. Specifically, these kinds of technologies or products are required to have some sort of revenue model to continue their presence within the landscape.
So, let’s delve a little bit more into the history of WhatsApp, its Meta takeover, and how it makes money from its wide user base.
The History of WhatsApp
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So, before we explore how WhatsApp makes money, let’s first explore a bit about its history. Indeed, the messaging application first came into existence in 2009, as previously stated. Moreover, it was brought to life by the duo of Jan Koum and Brian Acton.
The app is currently free to use and has become one of the most popular messaging platforms in the world. As of 2023, data shows that the application sports as many as 2 billion monthly users. Additionally, that figure outranks other popular online messaging services like Facebook Messenger.
The application was first created to allow its users to call or message people that they had in their contact list. however, the application certainly changed in 2018, when it was purchased by one of the largest social media networks on the planet.
Indeed, the company that was formerly known as Facebook made waves when it announced it had acquired WhatsApp. The Mark Zuckerberg-helmed Meta officially purchased the platform in February 2014 for an astronomical $19 billion.
Facebook Acquisition
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A key part of understanding the revenue model of WhatsApp, and its history, lies in discussing the massive Facebook acquisition. Indeed, the application became a key part of the Meta collection of products, alongside Facebook, Instagram, and other developing offerings from the Meta enterprise.
The acquisition was officially announced in 2014. Reports from that year show that following September 30th of that year, WhatsApp generated $1.29 million in revenue for its new parent company. Although Kuom and Acton had continued to be a part of the company that began to change, and it had to do with the overall revenue plan for the messaging platform.
in 2018, Kuom, who had become Facebook Inc. director, announced his decision to leave the company. Additionally, reports at the time had indicated that the decision was connected to two key developments ith WhatsApp. Firstly, Kuom and Acton objected to the use of user data and advocated for user privacy. Secondly, they both did not want advertisements to become a part of the platform.
Still, since the acquisition, WhatsApp has remained Meta’s second-largest property, behind only Facebook. However, it still maintains a position as the most utilized messaging service that the company holds. Even ahead of its Instagram and Facebook platforms. So, let’s continue by exploring how WhatsApp used to, and currently does, make money.
$1 Model
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In its earliest days, WhatsApp utilized a subscription model to make money. Specifically, the application required a $1 fee on an annual basis. However, this application had a slightly different take on the traditional subscription model.
For WhatsApp, the first year was free for users, with each subsequent year requiring the previously stated $1 fee. Moreover, this current model was in place when the application had around 700 million users worldwide. Therefore, estimations would note that it had a yearly revenue of around $700 million during this period.
That model changed in 2016, under the leadership of Meta. Indeed, the company had stated that WhatsApp was not generating any meaningful revenue in the long term. Therefore, many expected that the Facebook company would implore an alteration to that specific revenue model.
That prediction came to fruition shortly after when Meta announced that the messaging app would no longer require a $1 fee. Subsequently, Meta stated that the application would instead be free to use. So, without the subscription model, just how does WhatsApp make money? Well, let’s delve into what the company itself has said.
Revenue Plan Without Ads or Subscriptions
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In a blog post published by the company in 2016, they announced that WhatsApp would no longer be charging for users. Additionally, they affirmed that they would not be featuring ads on the platform. Therefore, they broke down how they would be able to keep the application running and optimal with seemingly no revenue being made.
Specifically, the application stated that it would be testing “tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from.” Moreover, they stated that this would mean allowing users to talk with banks about transactions, or airlines about delayed flights. All of these interactions occur through phone calls and text messages within WhatsApp.
The idea was a rather smart one, all while providing revenue for a company that is not interested in the presence of advertisements or subscription fees. The model that the company laid out would rely on the consumer being able to communicate with businesses. Subsequently, there would be some sort of revenue on the part of the businesses taking part in the application offerings.
Altogether, the plan was a key part of MEta’s hope to make WhatsApp, “free and more useful.” Fast forward to 2023, and the application has yet to feature ads and a subscription model. So, is it still utilizing the business model to gain revenue?
Moving Forward
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Currently, WhatsApp does not feature any subscription model or advertisements. However, the company has stated its intention to introduce a limited number of ads to the platform. Additionally, they have implemented a WhatsApp Pay feature that is a clear way for the company can earn some revenue.
Specifically, this service allows its users to send money to various bank accounts owned by other WhatsApp users. This would allow the company to enter into the digital payment space that has been one of the most profitable with modern consumers. Such an entry would provide a clear opportunity for revenue within the application itself.