How WhatsApp earns Money? | Secret Business Model of WhatsApp | Dhruv Rathee
WhatsApp has become the most popular messaging app in the world, with over 2 billion monthly active users. However, many people wonder how WhatsApp earns money since the app is completely free to use and has no ads. In this blog post, we will explore the business model of WhatsApp and how it has evolved over the years.
WhatsApp was founded in 2009 by Brian Acton and Jan Koum. They had previously worked together at Yahoo! for 9 years before applying for jobs at various companies, including Facebook and Twitter, but being rejected. They came up with the idea of creating WhatsApp when Jan Koum realized that he was missing calls while at the gym and thought there should be an app to notify his friends of his status. Initially, WhatsApp did not have messaging capabilities and users could only post their status. However, they soon realized that users were using the status as messages and decided to turn the app into a messaging service.
The app quickly gained popularity, especially in countries where SMS and calling rates were expensive. Within days, WhatsApp was downloaded over 200,000 times and received funding from investors. It became one of the top 10 apps in the App Store within 2 years. WhatsApp initially charged users $0.99 per year to use the app, which helped them become profitable within 3 years.
In 2014, Facebook acquired WhatsApp for $19 billion. The founders, Acton and Koum, agreed to the acquisition under the condition that WhatsApp would continue to operate independently. However, conflicts between Facebook and WhatsApp arose over the years, leading to the departure of both Acton and Koum. Facebook saw the acquisition as an opportunity to monetize WhatsApp’s user data, as they do with their own platform.
Facebook introduced the WhatsApp Business app, where businesses can create profiles and link them to their Facebook pages and websites. They also launched the WhatsApp Business API, which allows businesses to interact with customers and send automated messages. While the WhatsApp Business app is free, businesses have to pay a fee if they need to reply to customer queries after 24 hours. This fee varies by country.
In addition to the Business API, Facebook introduced WhatsApp Pay, a payment feature within the app. While normal users can use WhatsApp Pay for free, businesses have to pay a fee of 3.99% on every transaction. Facebook is also considering running ads on WhatsApp, specifically in the status feature.
The exact revenue generated by WhatsApp for Facebook is not publicly available. Forbes estimated in 2017 that the average revenue per user of WhatsApp could be between $4 to $12. The Indian division of WhatsApp earned a revenue of ₹68.4 million in 2019, with a profit of ₹5.7 million. Globally, it is estimated that 5 million businesses use the WhatsApp Business app.
WhatsApp’s push into WhatsApp Commerce has also gained traction, with businesses using WhatsApp as a platform to sell their products and services. For example, JioMart, an e-commerce platform under Reliance Industries, started using WhatsApp for its transactions after Facebook’s investment in the company.
There have been concerns about WhatsApp’s privacy policy and how Facebook plans to use the data collected from the app. People are uncertain about the future of WhatsApp’s data usage and whether it will be used for targeted advertising or other revenue-generating purposes.
In conclusion, WhatsApp initially monetized its app by charging users a small yearly fee. After being acquired by Facebook, WhatsApp expanded its revenue streams through the WhatsApp Business app, the WhatsApp Business API, and the introduction of payment features. Facebook’s investment in WhatsApp was aimed at eliminating competition and leveraging the app’s user data. The exact financial details of WhatsApp’s revenue for Facebook are not publicly disclosed, but it is clear that WhatsApp has become a significant player in the messaging and e-commerce space.
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