How Will Facebook Change WhatsApp?

The acquisition of WhatsApp by Facebook for $19 billion caused quite a ruckus in the tech industry. Now that the deal has gone through – after getting approval from the European Commission and the FTC – everyone is anticipating the changes that Facebook might make to the WhatsApp service.

While privacy sensitive users may be apprehensive about any prospective changes, it is inevitable that Facebook will have some plans in mind to generate revenue from the acquisition. Although the company announced that VoIP features would launch in the second quarter of 2014, it missed the deadline. Even though Apple and Google have beaten it to the punch with VoIP, there is no doubt that WhatsApp will still launch VoIP calling sometime in the future.

As of now, messages on the WhatsApp platform are limited to registered users only. Once VoIP calling is introduced, the company may offer bundles of messages or minutes to enable conversations with non-WhatsApp users as well. With millions of users sending billions of messages, such a move would bolster market share and consolidate WhatsApp’s position as the most popular messaging app across multiple markets.

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Although WhatsApp has always maintained that it will remain a communication platform and not a content distribution one, Facebook may intend to integrate payments within the service. Competitors like Kakao Talk and WeChat generate revenue by selling stickers and other micro-transaction payment models. Facebook may soon offer this feature for WhatsApp users as well.

Beyond such traditional business models, Facebook may have plans to position WhatsApp as an MVNO. What would that entail? WhatsApp has already experimented with this alternative in Germany by partnering with E-Plus, a cellular operator. E-Plus and WhatsApp have launched a prepaid Sim card with WhatsApp branding which includes unlimited messages through the service. Users do not have to pay for WhatsApp data usage and can send messages even if they have no calling credit left. In return, E-Plus would benefit by attracting users from rival carriers.

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Even though margins are razor thin for MVNOs, WhatsApp can leverage such partnerships to sign up new users and grow faster than the competition. This could be especially helpful for Facebook in markets where it has seen slow growth such as in Germany or amongst younger and more privacy conscious consumers. At least for now, WhatsApp users appear to trust the service far more than they do Facebook. If it makes the right moves, WhatsApp could turn out to be a tremendous strategic acquisition for Facebook.


by Bhagwad Park