How Does WhatsApp Make Money

WhatsApp Messenger is one of the most popular social media apps in the world, with over 1.5 billion users. It is a free instant messaging application. However, How does this messaging app make money? The answer is simple, it makes money through a variety of methods, including subscriptions, in-app purchases, and selling user data.

WhatsApp, which was founded in 2009, is a free social media app used to send out messages, photos, music, and video. Today WhatsApp has over 2 billion users and is spread across over 180 countries around the world. Every day, more than 100 billion text messages are sent and received on its network.

What is WhatsApp and how does it work?

WhatsApp is a free and most popular messaging app that is used to send out not only messages, but also photos, music, and video via the internet. Now, WhatsApp Users can even do a video call through the app. The service is quite similar to text messaging services; but, since WhatsApp sends the text message via the internet, it is substantially less expensive than texting. 

You can also use WhatsApp on your computer by visiting the WhatsApp website and downloading the program WhatsApp web for Mac or Windows. Because of features like group chatting, audio messaging, and location sharing, it is quite popular among youngsters.

WhatsApp also provides a business communication tool for businesses. Using this tool companies can:

  • Create profiles for their businesses with useful information for their consumers (such as an address, email address, or a link to their website).
  • Automate messages and quick replies for their customers. Example: automated sales funnel or automated customer support.
  • Businesses can broadcast their messages.

WhatsApp has different ways of generating revenue. To know more about WhatsApp’s business model, keep reading. 

Let’s take a look at how WhatsApp makes money:

WhatsApp Business

The WhatsApp Business app is a separate app that is designed for businesses. It offers features like customer chat, away messages, and automatic messages. The app is free to use for the first three months, and then costs $0.50 per month. The app is available for Android and iOS devices.

The WhatsApp Business application is different from the regular WhatsApp app in a few key ways. First, businesses can have their own WhatsApp account within the app, including their business profile which includes name, logo, and contact information.

Second, businesses can communicate with customers through automated messages. And finally, businesses have access to analytics, so they can see how often their messages are being seen and responded to.

Overall, the WhatsApp Business app is a great tool for businesses to use to communicate with customers. It offers a variety of features that can help businesses save time and money. If you’re looking for a way to connect with your customers, the WhatsApp Business app is worth considering.

Selling User Data

WhatsApp has also been known to sell user data to third-party companies. In 2017, it was revealed that WhatsApp had sold user data to Cambridge Analytica, a political consulting firm. This sparked controversy and concern over the privacy of WhatsApp users. While the company has denied sharing any personal data with Cambridge Analytica, the incident has raised questions about how WhatsApp handles user data.

If you’re concerned about your privacy, you may want to consider using another messaging app like Signal. However, if you don’t mind sharing your data with third-party companies, then WhatsApp is still a great option for messaging. Just be aware that your data may be sold to other companies.

WhatsApp Payments

One of the methods WhatsApp generates revenue is through WhatsApp Payments. WhatsApp Pay is a payment method similar to PayPal. Users may transfer money online for free to their friends, family, and companies.

It is based on UPI (Unified Payments Interface) which allows both parties to send and receive money. The recipient of the funds is charged a transaction fee of 3.99 per cent. This app, like other money-transferring apps, links to a connected bank account, from which cash is collected or deposited. This service is presently only accessible on select devices in India and Brazil.

WhatsApp Business is a solution designed for small enterprises. If a company has a larger size, it may choose to use WhatsApp’s Business API. They can incorporate it into their current business software thanks to the API endpoint. More than 2 billion individuals use WhatsApp in over 180 countries across the world. As a result, it is the biggest communication platform on the planet.

History Of WhatsApp

Jan Kaoum and Brian Acton worked together at Yahoo for 9 years, from 1998 to 2007, before founding WhatsApp in 2009. Both of them tried for positions at Facebook during the time between leaving Yahoo and founding WhatsApp but were turned down.

After purchasing an iPhone in January 2009, the founders felt that the app business was an unexplored sector, this led to the business idea of creating WhatsApp. This was back in July 2008, when the Apple App Store had just been open for around six months.

The first version of WhatsApp that was released wasn’t a messaging app. Earlier, the WhatsApp user could only change their WhatsApp status, which was visible to others in their network.

After Apple debuted push notifications in June 2009, which enabled users to be notified when someone in their network changed their status, WhatsApp witnessed a surge in user adoption. Users enjoyed this feature so much that they started using it to ping one another, which led to the app’s transformation into an instant mobile messaging app.

WhatsApp version 2.0 introduced the messaging function, which is currently at the heart of the service, and the service’s user base rose to 250,000 users. By early 2011, WhatsApp had risen to the top of the Apple App Store’s top 20 apps list.

As the app’s popularity increased, the creators began to attract the attention of potential investors. The creators, on the other hand, were certain that they wanted WhatsApp to be a free app without any ads. They were vehemently against the ad-based business model, according to a 2012 article on the WhatsApp blog titled “Why we don’t sell ads.”

Despite their aversion to receiving venture capital, the WhatsApp founders accepted $8 million from Sequoia Capital in April 2011, but only after they were promised that the service would remain ad-free.

By February 2013, WhatsApp had surpassed 200 million active users, and Sequoia had invested another $50 million at a value of $1.5 billion. But how did WhatsApp generate revenue in its early days if there were no adverts and no plans to add them in the future?

WhatsApp used the freemium business model in its early days to generate revenue. The app was free for a year to entice users and then paid a tiny annual membership price of $0.99 for continuous usage. Many users, on the other hand, never spent a penny to use WhatsApp since the service was automatically renewed when their free trial period expired.

Facebook Comes Calling

WhatsApp had 450 million monthly active users globally in 2014 when Facebook purchased it for $19 billion. In retrospect, the purchase, like Facebook’s acquisition of Instagram, not only helped the firm maintain dominance but also offered it a significant operational edge in the future. However, Sequoia Capital, which gained $3 billion on a $58 million investment, was the instant winner of this deal, not Facebook.

If you’re wondering why WhatsApp’s creators went forward with Facebook’s acquisition, one of the reasons was that Facebook wanted WhatsApp to be able to function freely and follow its goal. Following the purchase, the creators wrote on the WhatsApp site,

“Today, we’re announcing a collaboration with Facebook that will enable us to keep pursuing that straightforward goal.” This will allow WhatsApp to develop and thrive while also providing myself, Brian, and the rest of our team more time to work on creating a communications service that is as quick, inexpensive, and personal as possible.

For you, our users, nothing will change.

WhatsApp will continue to be autonomous and function independently. For a small charge, you may continue to use the service. You can use WhatsApp no matter where you are in the globe or what smartphone you are using.

You may also be certain that no advertisements will interrupt your conversation. If we had to compromise on the essential ideas that would always define our firm, our vision, and our product, there would have been no cooperation between our two companies.”

Facebook goes back on its word

When Facebook bought WhatsApp in 2014, not only were the founders guaranteed that they would be able to function freely, but Zuckerberg also promised that they would be under no monetization pressure for the following five years. However, the push to commercialize arrived sooner than expected, causing confusion about how WhatsApp will be monetized.

While Facebook wanted to include WhatsApp ads, which had previously been adamantly anti-ads, Brian advocated a metered-user model, in which users would be paid after a specific number of messages were sent.

The WhatsApp founder, Brian’s proposal was rejected by Facebook, prompting him to leave in September 2017 without even waiting for his shares to vest, resulting in a loss of $850 million. Jan Koum followed suit, resigning in April 2018, after his vesting time had expired.

How much money does WhatsApp make?

Except for Facebook, no one knows how much revenue WhatsApp Inc makes since the parent corporation does not disclose the income split of the several products it manages.

According to Facebook’s 2014 Form 10-Q, WhatsApp made a meager $1.28 million in the nine months leading up to September 30, 2014, but that was back when WhatsApp charged customers a $1 subscription fee after using Whatsapp.

Forbes forecasted in a January 2016 report that WhatsApp’s average revenue per user will be $4 by 2020, generating $5 billion in income for Facebook.

However, the projections were incorrect since they projected WhatsApp would reach 1.3 billion total monthly users by 2020 – a figure it had already surpassed by the middle of 2017.

Forbes increased their revenue predictions for WhatsApp in November 2017, ranging from $5 billion to $15 billion, with an average income per user of $4 to $12.

Even though WhatsApp’s revenue potential is still far from being reached, the product is likely to contribute more to its parent company’s basic income in the future years.

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