If it’s free online, then you’re the product. I still remember reading the original blog post from Brian Acton, the co-founder of WhatsApp, on why they wouldn’t build an advertising-led business model. They had learned it the hard way from their experience of working with Yahoo.
But fast-forward to 2023, Brian Acton and Jan Koum, the original co-founders of WhatsApp, are no longer with the company. The first nail in the coffin as far as the WhatsApp story is concerned is when the company changes its forced users to accept changes to terms of service.
Meta wanted to turn WhatsApp into the ‘everything app.’ After acquiring the platform for $19bn in 2014, they had planned to model its app based on its Chinese rival WeChat. This means you now not only chat with your friends and family, but order pizzas, pay utility bills, and more.
After the initial push, several users deleted the app switching to alternate platforms like Signal. But most had to return back, considering WhatsApp has a considerable base in India. The platform had nearly 487.5 million users as of 2022; we expect this number to have already crossed the 500 million mark.
The platform’s push to payments also saw nearly 40 million users signup for its payment service, nearly 8% of its users. It’s evident that users don’t want to switch to WhatsApp’s payment service. The platform has a trust problem, which is only getting worse.
Meta’s ad revenue in India breached $2 billion in FY 22 last year, an increase of nearly 74% from the year before. Facebook India is a non-exclusive reseller of advertising inventory to customers in India.
This means Meta India purchases ad inventory from Meta Platforms Inc USA and then, subsequently, sells to its Indian customers with certain markup. According to the regulatory filings, the data breakdown showed that the net advertiser reseller revenue was approximately INR 889 Cr, the cost of IT-ITES services was INR 1,420 Cr, and the income from other sources was estimated to be INR 15 Cr.
To be clear, Meta India, a reseller of ads, bills only a part of the ad revenue it makes here to the Indian arm; the rest is billed to its parent arm. But Meta’s push for growth has made WhatsApp the centerpiece of its strategy.
WhatsApp spam and scams are getting out of control in India
WhatsApp has over 2 billion users, a quarter of which are in India. The platform’s recent push to get business on its platform has improved its revenue but has proven to be a nightmare for its users.
The platform’s spam messages have tripled in the last few months. Most brands have replaced SMS with messages on WhatsApp. Previously WhatsApp only allowed brands to send transactional messages via the platform, but the recent push has made the situation worse.
Unlike short messaging services and email platforms, WhatsApp hasn’t allowed users to create a priority inbox/tab that filters promotional and unwanted messages. The only recourse for customers is to block these brands and delete the chat.
But with brands creating multiple business accounts, users are inundated with messages from different brands. As per Meta’s guidelines, these messages were supposed to opt-in, but brands are clearly flouting this guideline.
This only gets worse in a country like India, where brands have a complete disregard for users’ privacy. The push to sell products and services has only made brands desperate enough to message customers who have never transacted with them. Meta has turned the service into a hellhole of spam in the country.
If spam wasn’t enough, the platform has only become a defacto platform to scam people in the country. From hoax calls to fake job offers, the platform hasn’t done enough to safeguard its users. A cursory glance into Google trends data will tell you that the situation is getting out of control in India.
In the last few months, I’ve received hoax calls from international numbers, messages from someone impersonating an employee of the company, fake job offers, and the usual fake message from someone claiming to be a Bescom employee asking to clear the electricity bill.
WhatsApp allows you to message anyone without asking for their consent or permission, unlike other platforms, which require you to send a connection request or invite.
Most brands are flocking to WhatsApp because it helps you reduce CAC (Cost of Acquisition) and LTV (Life Time Value).
WhatsApp Business API is easily accessible and provides the first 1,000 conversations each month for free. Most plug-and-play conversational commerce platforms enable brands to automate WhatsApp messages using the API.
WhatsApp classifies conversation-based pricing into two different buckets, user-initiated and business-initiated conversion.
- User-initiated: When users reach out to the business regarding support and general queries, it is considered a user-initiated conversion.
- Business-initiated: When a business delivers notifications or broadcast messages, it is considered a business-initiated conversation. Businesses primarily bucket this into three use cases: marketing, utility (transactional messages), and authentication (one-time passcodes)
WhatsApp India has the lowest cost per conversion compared to other countries where the platform operates. The cost per business-initiated conversion and user-initiated conversion is 48 paise and 29 paise, respectively, as per Meta’s conversation-based pricing rate card, which is subject to change later this year.
Compare this to the average cost of sending an SMS ranges anywhere between 10-15 paise depending on the volume. But with the changes in short-service messaging applications, grabbing users’ attention is difficult.
Brands are increasingly moving away from SMS to WhatsApp, considering as users, we are constantly hooked to the private messaging app. The irony is there is nothing private about WhatsApp, you’re the product, and your data is up for sale.
This is a stark departure from the future that the co-founders of WhatsApp had originally planned for the platform. Brian and Jan had planned to charge users a $1 annual subscription fee from its users, but now as users, we are paying infinitely more, considering as Indians, we want everything for free.
India needs a viable alternative to the messaging app
WhatsApp Business India’s revenue is set to cross $1 billion in 2023. Meta will continue to push its products and services in the country, and there doesn’t seem to be a viable alternative to the platform.
The Indian government hasn’t done enough to safeguard its citizen’s data from these foreign corporations; we need better regulations to control the duopoly that both Meta and Google have in India. Industry bodies like IAMAI have turned into a mouthpiece for these big corporations.
Both these platforms put together control over 50% of advertising revenue earned in the country. If you’re a brand operating in the country, the question is, what is the alternative? You wish there were a viable Indian alternative that cared about its users.