TECH
01/05/2018 13:08 BST | Updated 12/07/2018 23:53 BST

How Does WhatsApp Make Money?

WhatsApp is free and doesn't include ads, so how does it make any money?

WhatsApp CEO Jan Koum has quit the company that he co-founded almost a decade ago.

While Koum’s statement on the matter suggests it was perfectly amicable, there are reports that he left due to concerns around privacy within WhatsApp and any changes that its parent company Facebook might make in the future.

According to the Washington Post, Koum was concerned about the way that Facebook would start using people’s data on WhatsApp to make money.

Koum’s old business partner and fellow WhatsApp co-founder Brian Acton left the company last year and subsequently invested some $50 million in Signal, a rival messaging app that focuses entirely on privacy and security.

So with all that in mind here’s a summary of how WhatsApp actually makes money, and why Koum may have been concerned about the future of the app.

How does WhatsApp make money?

Technically, it doesn’t.

When Facebook bought WhatsApp in 2014 for a cool $19bn the app was free to download but then after the first year it would cost 99p every year.

Just two years later WhatsApp scrapped the charge in 2016 and instead announced that it would be looking into a new feature that would allow them to make money.

That feature was to let businesses contact you through WhatsApp. It would charge the businesses to use the feature and would allow you to quickly contact your bank, or internet provider in much the same way that we do over email or by telephone.

WhatsApp launched WhatsApp Business in January 2018 as a free app for small businesses in the UK. These businesses will have to have your phone number already to contact you and there’s no way for you to search for them.

Oh and as we mentioned before, it’s free, so WhatsApp still isn’t making any money.

Albert Gea / Reuters
Co-founder of WhatsApp Jan Koum has now left the company that he helped found in 2009.

This is where Koum’s reported concerns start to become relevant. According to the Washington Post the co-founder was concerned that in order to increase the usefulness of WhatsApp Business Facebook would weaken the encryption that’s currently available and start sharing more personal data with third-parties and with Facebook itself.

Now Facebook doesn’t exactly have a great track record with that either after it announced less than two years after buying WhatsApp it would start sharing your phone number with Facebook in order to match up the accounts. 

According to Facebook this would allow you to find new friends to connect with and of course it then fed into Facebook’s own advertising systems.

It’s not clear whether or not this feature actually makes Facebook any money as beyond a phone number and what type of phone you’re using, there’s very little else that it can collect.

So there you have it. WhatsApp Business in its current form doesn’t look like the solution, however it could be the precursor to a larger rollout that includes multinational companies.

Yet despite all this, WhatsApp is the most popular messaging app on the planet with over 1.5 billion users. With that in mind it’s almost inevitable that Facebook will find a way to monetise the app, of course how it does that is still very much up in the air.