When Facebook bought WhatsApp for $19 billion almost a decade ago, Mark Zuckerberg made a promise: the CEO of Facebook assured that he would not interfere too much in the messaging application to not ruin a good project. Zuckerberg stuck to that philosophy as WhatsApp accumulated over 2 billion users worldwide. That was until 2019, when he began to exploit the growth potential and business opportunities of the application.
Today, WhatsApp has become increasingly crucial for Meta, the parent company of Facebook, Instagram, and other applications. According to company studies, more than half of Americans aged 18 to 35 with cell phones have installed WhatsApp, making it one of Meta’s fastest-growing services in its most mature market. The advertising on Facebook and Instagram that leads users to WhatsApp and its sister messaging service, Messenger, is also growing so rapidly that it could reach $10 billion in revenue this year, the company recently reported.
“If you imagine what the private social platform of the future will be like, starting from scratch, I think it would basically resemble WhatsApp,” said 39-year-old Zuckerberg in a recent interview.
WhatsApp’s momentum is a reminder that Meta is still fundamentally a business driven by its family of social applications. Although Zuckerberg has spent billions of dollars in recent years on his vision of the immersive digital world of the metaverse and artificial intelligence, applications like WhatsApp are bringing in new users and revenue. This makes it one of the keys to the future of his company, as it allows Meta to explore expensive, experimental, and unproven products.
WhatsApp has also become the backbone of Meta’s business in what Zuckerberg has called “a year of efficiency.” After global economic uncertainty caused a drop in advertising last year, Meta cut nearly a third of its workforce. The company continues to rely on its core applications to achieve steady sales growth and appeal to Wall Street.
In the interview, Zuckerberg characterized WhatsApp as the “next chapter” of his company. He claimed that the messaging application could become the cornerstone of enterprise messaging as well as the leading chat application.
“Now that everyone has a mobile phone and spends the day producing content and sending messages, I think we can do something much better and more intimate than a simple channel for all your friends,” he said.
A decade ago, WhatsApp was a very different application on purpose. Jan Koum and Brian Acton, two engineers who had worked together at Yahoo, created WhatsApp as a fast, free, and secure way to exchange messages with friends and family.
And most importantly, WhatsApp used a data connection instead of costly SMS messages from mobile operators. The service also did not store people’s messages on its servers. It also lacked some features that other applications like iMessage had, which allowed it to function quickly and easily even with slow data connections.
WhatsApp took off quickly: hundreds of millions of people worldwide downloaded it in just a few years. This caught the attention of Zuckerberg, who acquired WhatsApp in 2014 after the company received proposals from Google and the Chinese internet company Tencent, according to two people familiar with the matter.
Initially, Zuckerberg left most of the decisions about WhatsApp in the hands of its founders, who stayed on after the acquisition by Facebook. Koum and Acton were reluctant to talk about making money and advertising, prioritizing security in the messaging service. In April 2016, WhatsApp implemented end-to-end encryption, which prevents messages from being intercepted or viewed by outsiders.
“It seemed like Facebook had been keeping WhatsApp in its pocket for a long time, as a kind of ‘fertile field’ opportunity for monetization,” said Eric Seufert, an independent mobile analyst who follows Meta. “It has almost been more valuable for them as an unknown quantity, where they often said, ‘Who knows how big the business could be?'”
But by 2019, Zuckerberg was eager to assert more control over his company’s applications, integrating them to share data and technology. This led to the departure of the founders of WhatsApp and other employees. Acton went to a rival company, Signal; Koum now focuses on philanthropy and buying high-end Porsches with air-cooling systems. Later on, some former WhatsApp executives accused Zuckerberg of breaking promises about privacy that he had made when acquiring the company.
Since then, Zuckerberg has turned WhatsApp into a more comprehensive messaging service and company. WhatsApp has added features ranging from simple emoji reactions and message forwarding to disappearing messages and compatibility with other devices such as Mac and Windows desktop computers.
For most of its existence, WhatsApp was more popular among users outside the United States. But with the new features, more Americans began to try it out. In the United States, it has grown more rapidly among young people in Miami, New York, Los Angeles, and Seattle, according to the company’s studies. A Snapchat-like feature that allows users to post temporary text, photo, and video updates, called Status, has become the most used Stories product in the world, according to Meta.
WhatsApp also began offering payment tools and customized applications to businesses that wanted to use the platform to communicate with consumers. Chevrolet, Lenovo, Samsung, and L’Oreal now use some of these tools, and WhatsApp has forged commercial and advertising alliances in Latin America and India with companies like Amazon and Uber.
In 2017, WhatsApp introduced “click-to-message” advertising, an ad format that businesses can purchase and place within a Facebook channel. When users click on the ad on Facebook, they are linked to a brand’s WhatsApp account, where they can chat with customer service representatives or take actions like booking a flight or purchasing products. According to the company, these ads have become Meta’s fastest-growing advertising format.
Nissan spent last year creating WhatsApp chatbots that can help the automaker communicate with its customers in Brazil and direct them to a nearby car dealership. Between 30 and 40 percent of Nissan’s new sales opportunities in Brazil now come through WhatsApp, the automotive company reported, and the service has reduced its response time to customers from an average of 30 minutes to a matter of seconds.
“You’re not being intrusive because you’re willing to attend to customers at their own pace,” said Mauricio Greco, Marketing Director of Nissan Brazil, in an interview. “It’s about giving our sellers the tools they need because they really want to sell.”
Nikila Srinivasan, Vice President of Product Management at Meta, said the company was also building its payment infrastructure and working with businesses in India, Brazil, and Singapore to enable people to make purchases directly within WhatsApp. More than 200 million businesses use WhatsApp’s professional business applications, she claimed.
However, WhatsApp faces competitors and regulatory obstacles. Its biggest rival is iMessage, Apple’s native messaging application that comes pre-installed on all iPhones and Macs. It also has to contend with smaller but beloved newcomers like Signal and Telegram, which are especially popular in Europe.
In Europe, WhatsApp may be forced to integrate with competing messaging services as part of the requirements of a new law, the Digital Markets Act, said Seufert. The company has stated that it has begun the difficult technical work of ensuring that…