WhatsApp was created at the end of 2009 by Brian Acton and Jan Koum as a replacement for expensive SMS services. 1 The app lets users create a contact book, and send messages to anyone with the app installed for free. It’s available on iPhones, Androids, and desktops. 2 If it’s free-to-use, how can WhatsApp earn profits?
Meta ( META) previously Facebook acquired WhatsApp during February of 2014 to the tune of $19 billion. in 2014, according to Facebook Form 10-Q in the nine months leading up to September 30 the year 2014. WhatsApp produced revenue of $1.29 millions. 3 4
In the year 2018, WhatsApp co-founder and Facebook Inc. director Jan Koum announced his departure from Facebook. The media reports suggest that Koum left Facebook following a dispute with the company regarding its use of user data and the desire to allow ads within WhatsApp. 5 Koum together with founder Brian Acton, has long been a proponent of protection of privacy for WhatsApp Users. 6
In March 2022 WhatsApp was home to more than 2 billion users across 180 countries. It was also Meta Platforms Inc.’s (formerly Facebook) second-biggest product, second only to its own application. It was bigger than Instagram the Facebook Messenger app, which was the thirdand fourth largest properties. 7 Read further to find out how WhatsApp earns money.
One Dollar at a Time and Beyond
The answer was simple: it used to be $1 per month. In certain countries it used to cost $1 for download. In others the initial year is free, however each year thereafter costs $1. In the end, WhatsApp had a subscription model. 10 In the peak of this model, there were around 700 million users across the globe; 11 yearly revenue could be put as $700 million at the time.
In January of 2016, Facebook revealed in a 10-Q report that WhatsApp was being monetized to a “a very limited fashion,” it might not be earning significant profits in the near future and that its strategy will be changed. 12 Shortly afterward, WhatsApp announced in a blog post that the age of subscriptions was coming to an end. The messaging app will be available for free. 10
There aren’t any advertisements in the app, but there are ads. “Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from,” the company announced on its website at that time. The idea is to let users connect directly with their airlines, banks as well as other companies. via the app, while the business pays the bills previously paid via the subscriptions. 10
Although WhatsApp’s financial statements aren’t available to the public (Meta doesn’t break down the revenues according to business), Forbes estimated that its revenue would be between $27 and 29 billion in Q1 2022. 13 As in February 2022 WhatsApp was home to more than two billion people. 7
WhatsApp Business, the business platform for this messaging application, comes with an array of tools that allow companies to gain insights into their business and analyze metrics which makes it a desirable business tool.
Focusing on Growth
WhatsApp is a global phenomenon. The top three countries include: India with 390 million users as well as 108 million users in Brazil with 75 million of them in United States. 14 With SMS apps, the growth is rapid; when one member of the group downloads and uses the app, a lot of new users use the app to interact with the person who downloaded it. They then motivate other members of their social networks to download the app.
With the increase in market penetration the app becomes essential and user numbers grow.
Information from Statista
Is It Really About the Money Though?
Industry Insiders have speculated that a portion of the reason for acquiring WhatsApp was to allow Meta to get access to the user’s behavior information as well as personal data.
With its location sharing information 100 billion messages sent each day as well as access to the entire contacts, Meta has access to an abundance of personal data–all stored on the server. 15 14 Although Mark Zuckerberg has stated that the data isn’t used to improve the effectiveness of Meta advertisements, it could be until the user makes changes to the settings to stop sharing details to Meta. 16
End-to-End Encryption Controversy
WhatsApp along with other messaging companies (including Apple) were in the news with governments across the globe after it was discovered that terrorists were using apps to communicate prior to or during terrorist attacks.
Authorities and counter-terrorism organizations wanted the app developers to provide the encryption keys to get access to messages that were sent and received by terrorists. However, the companies did not agree. This led to WhatsApp’s decision to adopt end-to-end encryption. This prevents any person, including WhatsApp other than the recipient and the sender from accessing the information shared through the application. 17
How Many Users Does WhatsApp Have?
According to estimates from industry experts, WhatsApp has more than 2 billion users around the world by 2022. 18
Is WhatsApp Really Secure and Private?
Absolutely, WhatsApp messages, including images, text, and other media are protected with encryption from end to end. This means they can’t be read or intercepted in the course of transmission.
Does WhatsApp Make Money?
It’s true, WhatsApp generated more than $8.7 billion in revenue by 2021 , which was the revenue of parent company Meta (formerly Facebook). 9
The Bottom Line
WhatsApp is now one of the most-loved messaging apps around the globe with just the potential to increase. If you think Meta has been overpaid for WhatsApp or it’s not the case, the truth is, the service is an expanding revenue stream that has infinite possibilities that could enable it to generate greater revenues in the future.