Journey back in your mind to a year ago: remember when Facebook offered $19 billion to acquire WhatsApp? Pretty well everyone thought such an offer was little short of crazy (most American pundits hadn’t ever used the messaging app). Now we know it wasn’t so crackers after all: Snapchat is now raising money on a valuation of $20 billion. How come?
The blunt answer is that messaging lies at the heart of the mobile channel. And without WhatsApp, Facebook’s international situation wold be precarious. If Google had got it instead, the proverbial fat lady would be singing for Facebook. But Zuckerberg hadn’t gone temporarily fruit-loops; he was playing hardball – by having WhatsApp on board, now the most popular messaging app on the planet, he neutralised the largest threat to his network’s global domination.
Messaging apps are opened more often than any other app. You might spend longer scrolling through your news feeds on Twitter, Instagram and Facebook, but you open messaging apps for multiple short exchanges far more frequently. As TechCrunch journalist Josh Constine argues, that makes them an inestimably valuable vector for other experiences.
Advertising on messaging apps isn’t a viable option (they’re just too interruptive for that). But they can be used for additional purposes with real monetising possibilities (China’s WeChat, for instance, lets you search, pay friends, buy movie tickets, shop and call a taxi, and Japan’s Line hosts an identity platform for games as well as Line TV and Line Pay). You don’t need to fiddle around with a raft of different apps and passwords when you can do everything while you chat.
But given that WhatsApp will not be used for advertising (Facebook has vowed it won’t), and it only charges its meagre $1 subscription fee in a handful of markets, how can Facebook earn money from it? Answer: it doesn’t need to. It can keep chat pure simply by charging for content promotion or taking a cut of ecommerce in its other services.
Bearing in mind Zuckerberg’s quest for a connected world, we shouldn’t fail to notice that WhatsApp has proven immensely popular in the developing world, where subscriptions for SMS services don’t do down at all well. Constine sums it up succinctly:
“Messaging apps are the portals of mobile, and Facebook owns the biggest one. Crazy like a fox.”