WhatsApp is one of the most famous apps in the world with more than a billion users from around the world. But being a free application, it’s logical to ask oneself how it has managed to earn money. This issue has been discussed for a long time and still stands today.

WhatsApp and its business model

Founded in 2009 by Brian Acton and Jam Koun, WhatsApp first arrived as a status update app. It was launched mainly in the United States but it didn’t go unnoticed, it slowly grew exponentially to unthinkable levels. During its beginnings, this app started with a long but necessary trial period.

The point is that its creators wanted to offer something different. Instead of offering an application with advertising and subscription payments, they wanted to create a platform that would limit itself to doing what everyone wanted. Allow people to talk freely without interruptions and with the possibility of doing many things at once.

how is whatsapps business model
WhatsApp can be used on any smartphone, computer or laptop, it’s free in most countries and allows you to talk to anyone in the world who has a phone and downloads the app. Source: The Confidential

But frankly, between the words and the action there was still a long way to go. Offering a completely free service with no sales in between proved to be inconvenient for WhatsApp. Therefore, it had to resort to obtaining investments from Sequoia Capital to survive. Plus paid subscriptions per year for $1, in exchange for a verification code.

The company received two investments: one of $8 million in 2011 and another of $52 million in 2013. Through them, it was able to maintain itself and at the same time continue to develop a wide network of users around the world. This allowed WhatsApp to obtain a global presence until it was purchased by Facebook in February 2014 for $19 billion.

Facebook’s plan

From the moment that Facebook CEO Mark Zuckerberg acquired ownership of WhatsApp, things changed. The terms and conditions of the platform were modified to reflect how things would be from now on. Now WhatsApp would become a factory for generating user data from around the world.

What does this mean? The strategy that Facebook has is to take advantage of its ads (Facebook Ads), using the user data collected by WhatsApp. Since on Facebook the ads are shown based on the information collected from people.

Therefore, using the data collected from user accounts in WhatsApp allows Facebook to display advertisements more effectively. Becoming in turn the source of income for the company, or both companies in this case. However, this isn’t the only income entry that exists for them.

Recently, WhatsApp has implemented another platform called WhatsApp Business, similar to the normal service but for companies. And of course, with more varied options to connect business owners (that are verified) with their customers around the world. For now it’s free, but it’s expected that WhatsApp will adapt it to be freemium.

WhatsApp Business Model
The WhatsApp Business app helps a business connect with people through the instant messaging platform. Source: Teknófilo

This is a business model that consists of offering a free service, but obtaining money by offering more advanced or special ones as well. However, the company’s decisions regarding its future revenue streams are still yet to be seen.

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Although it’s for everyone and nobody buys it, WhatsApp still makes money!