Ask HN: How does WhatsApp make money?
55 comments
The last thing I read (a few months ago) was that they were planning on introducing ads. But it seems it hasn't happened yet.
I suppose that through their Business API, but given the amount facebook paid for them and the scale at which they operate, I don't think that would be enough to cover their costs.
My speculation - Facebook might mine the conversation data & sell that to third party/show targeted ads on Facebook.
Whatsapp is end to end encrypted. Facebook is not able to see the contents of Whataspp messages.
Well, that's what they say, but being closed source it's reasonable to think there might be backdoors somewhere. Besides, WhatsApp is not p2p, but client server based. Nobody knows for sure if the NSA Prism program still exists, but it does, Facebook would probably be part of it.
end-to-end encrypted with encryption key managed by WhatsApp/FB. Users don't own the key.
I thought you generated the key pair on your device and never sent the private key, not even to WhatsApp? Isn't that the idea behind the Signal protocol, which WhatsApp uses?
That's the theory. The closed source nature means that the WhatsApp app could send the key back to WhatsApp. How would you know if it does or doesn't?
Whatsapp didn't have end-to-end encryption until April 2016.
The app used to cost €0.89 per year (which I guess was $1 at the time).
I'd be surprised if Facebook had bought WhatsApp looking for revenue. Even if the service is operating at a loss, it's still providing FB the messages (at the very least, their metadata) and personal data of two billion people.
The app used to cost €0.89 per year (which I guess was $1 at the time).
I'd be surprised if Facebook had bought WhatsApp looking for revenue. Even if the service is operating at a loss, it's still providing FB the messages (at the very least, their metadata) and personal data of two billion people.
How will they get any messages if they are end to end encrypted?
To be fair, I don't think they get much value from encrypted content. This doesn't mean they can't log every single thing you do with a timestamp attached to it. Privacy and anonymity are not the same thing.
Adding a bit to this the contents of the message are E2E encrypted but the metadata is probably still available (sender, receiver, timestamp, etc). FB probably already has the phone numbers of most of users in WhatsApp and can use the metadata to make inferred decisions about those users.
Yes, they also get location (coarse or fine), media type (text chat, voice or video call), duration, any attachments sent (probably including file type, name and size, and frequency of contact, - all timestamped as you say.
Interesting! My guess is FB has built a microservice ecosystem for Whatsapp to call home with all this data.
All it would take them is one software update.
[deleted]
By using your conversation metadata, to sell you better ads or sell the data to other advertisers.
>b-b-but it's encrypted!
Doesn't matter. They know who you are, because your account is linked to your FB account (either directly or just by matching your phone number). Then you send them your full contact list when you install the app (have you tried using WhatsApp without the Contacts permission?). Then they can see metadata about who you talk to and how often.
Pulling up those advertising profiles, they can add to your profile: for example, if a good portion of the contacts you talk to daily have "interested in cars"/"republican"/"male 25-29" in their profile, there's a good chance you fall into those categories too.
>b-b-but it's encrypted!
Doesn't matter. They know who you are, because your account is linked to your FB account (either directly or just by matching your phone number). Then you send them your full contact list when you install the app (have you tried using WhatsApp without the Contacts permission?). Then they can see metadata about who you talk to and how often.
Pulling up those advertising profiles, they can add to your profile: for example, if a good portion of the contacts you talk to daily have "interested in cars"/"republican"/"male 25-29" in their profile, there's a good chance you fall into those categories too.
> have you tried using WhatsApp without the Contacts permission?
Yes, that's how I use WhatsApp. It sucks because all I see is conversations and calls from phone numbers without names.
But I don't trust WhatsApp enough to share my whole contacts list with them.
I would be happy to grant permission for individual number-name associations to be visible to WhatsApp, if that was possible. It's the contacts list as a whole I'm not willing to share; the people I'm actually talking with on it would be fine.
But no, we can't have sensible things like that.
Showing the numbers is very silly, because WhatsApp knows the name of every person I'm talking with. It has their name from the person at other end! But no, it has to use the Dark Pattern(tm) of showing numbers to pressure me into sharing all my contacts, which it doesn't actually need.
Yes, that's how I use WhatsApp. It sucks because all I see is conversations and calls from phone numbers without names.
But I don't trust WhatsApp enough to share my whole contacts list with them.
I would be happy to grant permission for individual number-name associations to be visible to WhatsApp, if that was possible. It's the contacts list as a whole I'm not willing to share; the people I'm actually talking with on it would be fine.
But no, we can't have sensible things like that.
Showing the numbers is very silly, because WhatsApp knows the name of every person I'm talking with. It has their name from the person at other end! But no, it has to use the Dark Pattern(tm) of showing numbers to pressure me into sharing all my contacts, which it doesn't actually need.
> But I don't trust WhatsApp enough to share my whole contacts list with them.
Trouble is, you don't have to. Your friends have already shared /their/ contact lists.
You're already a node in the network, even if you've never logged in.
Trouble is, you don't have to. Your friends have already shared /their/ contact lists.
You're already a node in the network, even if you've never logged in.
There may be a node. But even so, it is a myth that the social networks know everything from other people's shared information.
WhatsApp does not know which people/entities I have in my contacts list.
That cannot be deduced from other ordinary people's lists.
It is a two-sided issue. On the one side: We should understand that we can't completely hide our personal information because other people share it without our consent, and that we should all be more careful what we share because it can harm other people, and is without their consent.
But on the other side: There is still value in limiting what we share about ourselves and others, because what other people share is limited and does not produce as complete a picture as when we add more to it ourselves.
So, WhatsApp knows about specific contacts other people have entered which include me, but it doesn't know what's on my full list. There are many things which can be estimated from my contacts list which I don't want to share and can't be deduced from other people's contact lists:
- Which banks I bank with.
- Which credit cards I have.
- Which recruiters I've been talking with.
- Which prospective companies I've talked with about getting a job.
- Which clients I'm doing business with or have done.
- Which taxi firms I use.
- Which restaurants I know well enough to have in my list.
- Which lenders I'm borrowing from.
- Which debt collectors I'm talking or not talking with.
- Which people I have a secret affair with, who are smart enough not to share their contacts list.
- Which journalists I'm in touch with, who are smart enough not to share their contacts list.
- Who I'm organising protests against the state with, who are smart enough not to share their contacts list.
- Who I know well enough to have not just their number but also their email address and other contacts, home address, notes etc.
- Which other communication applications I'm using if those store contacts in the list.
As well as the number of each of the above, to suggest which aspects of my life to target for advertising, policing, or general intimidation and election manipulation.
WhatsApp does not know which people/entities I have in my contacts list.
That cannot be deduced from other ordinary people's lists.
It is a two-sided issue. On the one side: We should understand that we can't completely hide our personal information because other people share it without our consent, and that we should all be more careful what we share because it can harm other people, and is without their consent.
But on the other side: There is still value in limiting what we share about ourselves and others, because what other people share is limited and does not produce as complete a picture as when we add more to it ourselves.
So, WhatsApp knows about specific contacts other people have entered which include me, but it doesn't know what's on my full list. There are many things which can be estimated from my contacts list which I don't want to share and can't be deduced from other people's contact lists:
- Which banks I bank with.
- Which credit cards I have.
- Which recruiters I've been talking with.
- Which prospective companies I've talked with about getting a job.
- Which clients I'm doing business with or have done.
- Which taxi firms I use.
- Which restaurants I know well enough to have in my list.
- Which lenders I'm borrowing from.
- Which debt collectors I'm talking or not talking with.
- Which people I have a secret affair with, who are smart enough not to share their contacts list.
- Which journalists I'm in touch with, who are smart enough not to share their contacts list.
- Who I'm organising protests against the state with, who are smart enough not to share their contacts list.
- Who I know well enough to have not just their number but also their email address and other contacts, home address, notes etc.
- Which other communication applications I'm using if those store contacts in the list.
As well as the number of each of the above, to suggest which aspects of my life to target for advertising, policing, or general intimidation and election manipulation.
whoa. this is one reason i am STILL NOT ON WHATSAPP..... seriously.
this comes from back when truecaller was introduced and i had an iphone. saw permission to access contacts. never used the app, even today. same for whatsapp or facebook. call me paranoid, but i don't want being "linked". same reason i dont have a google account and even though i have been using an android device for the past 2 years, there is no account and i use something like aurora store to get apps. works decent enough
this comes from back when truecaller was introduced and i had an iphone. saw permission to access contacts. never used the app, even today. same for whatsapp or facebook. call me paranoid, but i don't want being "linked". same reason i dont have a google account and even though i have been using an android device for the past 2 years, there is no account and i use something like aurora store to get apps. works decent enough
I have a "junk" Google account on my phone. It's not linked to anything except my phone. I don't even know the account name.
It means I can't use in-app payments, and will never pay for an app, but at least I can download essential (to me) apps like banking apps from the Play store.
It means I can't use in-app payments, and will never pay for an app, but at least I can download essential (to me) apps like banking apps from the Play store.
oh. why dont you try aurora store? that app allows you to download actual play store apps which is what i use. it uses anonymous google accounts to login and give you access.
Thanks! I don't know if I will, because I'm loathe to mess with something so life-critical that is working, but I appreciate the pointer.
At least in Europe that is not true, from their official page
"We do not share data for improving Facebook products on Facebook and providing more relevant Facebook ad experiences.Today, Facebook does not use your WhatsApp account information to improve your Facebook product experiences or provide you more relevant Facebook ad experiences on Facebook. This is a result of discussions with the Irish Data Protection Commissioner and other Data Protection Authorities in Europe[...]
Importantly, WhatsApp does not share your WhatsApp contacts with Facebook or any other members of the Facebook Companies, and there are no plans to do so."
https://faq.whatsapp.com/general/security-and-privacy/how-we...
"We do not share data for improving Facebook products on Facebook and providing more relevant Facebook ad experiences.Today, Facebook does not use your WhatsApp account information to improve your Facebook product experiences or provide you more relevant Facebook ad experiences on Facebook. This is a result of discussions with the Irish Data Protection Commissioner and other Data Protection Authorities in Europe[...]
Importantly, WhatsApp does not share your WhatsApp contacts with Facebook or any other members of the Facebook Companies, and there are no plans to do so."
https://faq.whatsapp.com/general/security-and-privacy/how-we...
What they say in official text is not automatically what they actually do. Example: maybe they dont sell data to Facebook, but to a middle-man company. And this company sells to Facebook. Disclaimer texts are shady things!
that would also be illegal under GDPR. Not to mention it's a misunderstanding about how Facebook works. Facebook does not sell data at all, they sell ad-space based on their own data.
> that would also be illegal under GDPR
Not a problem to Facebook: https://ruben.verborgh.org/facebook/#history
Not a problem to Facebook: https://ruben.verborgh.org/facebook/#history
not sure what the relevance here is. That user is complaining about not getting network data from Facebook which may not be covered by GDPR, rather than his personal data he stored on the service.
However giving your data to third parties without your explicit consent is without a doubt a violation of GDPR.
However giving your data to third parties without your explicit consent is without a doubt a violation of GDPR.
have you tried using WhatsApp without the Contacts permission?
Not to be pedantic about an off-hand comment, but yeah, works fine, AFAICT. I'm not even a "pro" WhatsApp user: I use it strictly for the one social group that didn't think SMS was good enough. Meaning I didn't have to know the secret incantation. I'm sure I was asked about contacts, to which I assume I said "FB? Hahaha, no way!" And if I go to the Status tab, it sho'nuff complains about me not uploading contacts and if I want status of all my WhatsApp peeps, I need to upload contacts.
Not to be pedantic about an off-hand comment, but yeah, works fine, AFAICT. I'm not even a "pro" WhatsApp user: I use it strictly for the one social group that didn't think SMS was good enough. Meaning I didn't have to know the secret incantation. I'm sure I was asked about contacts, to which I assume I said "FB? Hahaha, no way!" And if I go to the Status tab, it sho'nuff complains about me not uploading contacts and if I want status of all my WhatsApp peeps, I need to upload contacts.
> have you tried using WhatsApp without the Contacts permission?
Yes. It works. Reaching out to new people is a PITA, as you have to append their phone number to a an api.whatsapp.com/send?phone= URL and open that on your phone, but it works.
Yes. It works. Reaching out to new people is a PITA, as you have to append their phone number to a an api.whatsapp.com/send?phone= URL and open that on your phone, but it works.
>b-b-but it's encrypted!
Facebook actually updated their LIMITATIONS OF KEY METRICS AND OTHER DATA section at the top of their annual and quarterly reports[1] this year to say that "as a result of limited visibility into encrypted products, we have fewer data signals from WhatsApp user accounts and primarily rely on phone numbers and device information to match WhatsApp user accounts with accounts on our other products". Prior to 2020, did they not disclose this in their reports.
[1] https://last10k.com/sec-filings/fb
disclosure: I work on Last10K.com
Facebook actually updated their LIMITATIONS OF KEY METRICS AND OTHER DATA section at the top of their annual and quarterly reports[1] this year to say that "as a result of limited visibility into encrypted products, we have fewer data signals from WhatsApp user accounts and primarily rely on phone numbers and device information to match WhatsApp user accounts with accounts on our other products". Prior to 2020, did they not disclose this in their reports.
[1] https://last10k.com/sec-filings/fb
disclosure: I work on Last10K.com
Yes, we can all agree that E2EE means FB isn't reading your messages and using that data (like they do, for example, in FB Messenger / IG messages). But the metadata is still valuable, and not encrypted, and is probably how they're making money with the product.
I can't attest to this metadata but it's just worthy to note Facebook starting telling shareholders this year that they have "limited visibility into WhatsApp user activity due to encryption".
A closed-source App could send the private key to a server. I hope WhatsApp doesn't do that.
They absolutely could. But, given the popularity of FB properties, I'm sure there are several groups who decompile their releases on a regular basis and I'm sure there'd be a lot of screaming if the E2EE wasn't implemented properly (see: the Zoom E2EE debacle).
I don't think they do make any money actually. There's still no ads in the app which caused a huge argument a while ago, and the app is free.
I guess indirectly maybe they acquired some more Facebook users although I suppose most people who had whatsapp also already have a FB account.
My guess is that they always wanted to turn it into the western wechat.
I guess indirectly maybe they acquired some more Facebook users although I suppose most people who had whatsapp also already have a FB account.
My guess is that they always wanted to turn it into the western wechat.
I think the business model is to get other businesses using their WhatsApp for Business services, and then cross-sell them to the FB ad platform.
From Businesses - small and large. Using the WhatsApp API. That alone is a multi-billion dollar opportunity.
For example, people like my startup (https://www.zoko.io) provides software that enable folks to run any business on (only) WhatsApp.
WhatsApp would make money by - charging for certain types of messages sent via the API (already doing it) - from ads on the WhatsApp, Facebook and Instagram Platform that click directly to WhatsApp.(already doing it) - enabling payments via WhatsApp Pay and then take a cut of the payments. (coming soon)
I am amazed by the things that my customers do with WhatsApp - like Fintech companies who provide loans to Uber drivers via WhatsApp, OR Fertility Clinics that dole out professional advice on how to make babies, via WhatsApp.
WhatsApp is just getting started! Remember when the internet was free, Google showed up and became a toll collector for doing anything on the internet? Just like that, WhatsApp is the internet of the #nextbillion people. WhatsApp, if they play their cards right, could become the "toll collector of the internet for the #nextbillion". I am literally all in, that it will.
For example, people like my startup (https://www.zoko.io) provides software that enable folks to run any business on (only) WhatsApp.
WhatsApp would make money by - charging for certain types of messages sent via the API (already doing it) - from ads on the WhatsApp, Facebook and Instagram Platform that click directly to WhatsApp.(already doing it) - enabling payments via WhatsApp Pay and then take a cut of the payments. (coming soon)
I am amazed by the things that my customers do with WhatsApp - like Fintech companies who provide loans to Uber drivers via WhatsApp, OR Fertility Clinics that dole out professional advice on how to make babies, via WhatsApp.
WhatsApp is just getting started! Remember when the internet was free, Google showed up and became a toll collector for doing anything on the internet? Just like that, WhatsApp is the internet of the #nextbillion people. WhatsApp, if they play their cards right, could become the "toll collector of the internet for the #nextbillion". I am literally all in, that it will.
Those are some big words but.... the chat market is flooded. I barely use Whats App as well as most people I know so they are far from ubiquitous.
Why then? Why not any other chat app, or even messenger with far greater reach and just as many resources?
Why then? Why not any other chat app, or even messenger with far greater reach and just as many resources?
That might be the case in your country... but in Latin America, for example, WhatsApp is HUGE. People don't text each other, they use WhatsApp. Mobile carriers provide plans with discounted traffic for WhatsApp, or sometimes even free. Entire family and friend groups constantly keep in touch using WhatsApp.
In fact, Bolsonaro used WhatsApp spam as part of his election campaign strategy[1].
[1] https://www.theguardian.com/world/2019/oct/30/whatsapp-fake-...
In fact, Bolsonaro used WhatsApp spam as part of his election campaign strategy[1].
[1] https://www.theguardian.com/world/2019/oct/30/whatsapp-fake-...
WhatsApp are just not used as much in US. As a matter of fact no one knew what was WhatsApp in US before Facebook acquire them.
It was pretty much the days of AIM and MSN. When the rest of the world was on MSN. US was still on AIM.
Without the China Market WhatsApp has 1.6B user.
It was pretty much the days of AIM and MSN. When the rest of the world was on MSN. US was still on AIM.
Without the China Market WhatsApp has 1.6B user.
In those United States, you would be right to think so. Yes, there are other chat apps. A flood? No. A (cess)pool, maybe.
Outside of WhatsApp (2 Billion Monthly Active Users), Messenger (1.4 Billion MAU) and WeChat (1.2 Billion MAU) the others stand little chance of building and benefiting from being a platform.
Setting aside WeChat and China, if you now look at the next billion users who are going to be using the internet for the first time, WhatsApp is the lens through which they see the internet - they communicate, consume news and entertainment, buy and sell things, get medical advice, even fall in love via WhatsApp.
In India, where a significant portion of that #nextbillion are gonna come from, Messenger has ~100M users and WhatsApp has ~500M MAU. Similar multiples play out in "WhatsApp first" markets like Latin America, most parts of Asia.
Case in Point: Even though it had nothing to do with our business, we recently helped hack together a solution to conduct two, 20-question, exams for 100K students in an Indian State. Simply because every family had WhatsApp (and nothing else). Messenger simply doesn't have the reach in the emerging world.
Outside of WhatsApp (2 Billion Monthly Active Users), Messenger (1.4 Billion MAU) and WeChat (1.2 Billion MAU) the others stand little chance of building and benefiting from being a platform.
Setting aside WeChat and China, if you now look at the next billion users who are going to be using the internet for the first time, WhatsApp is the lens through which they see the internet - they communicate, consume news and entertainment, buy and sell things, get medical advice, even fall in love via WhatsApp.
In India, where a significant portion of that #nextbillion are gonna come from, Messenger has ~100M users and WhatsApp has ~500M MAU. Similar multiples play out in "WhatsApp first" markets like Latin America, most parts of Asia.
Case in Point: Even though it had nothing to do with our business, we recently helped hack together a solution to conduct two, 20-question, exams for 100K students in an Indian State. Simply because every family had WhatsApp (and nothing else). Messenger simply doesn't have the reach in the emerging world.
They announced in-app purchases a few hours ago: https://www.reuters.com/article/facebook-whatsapp-ecommerce-...
There is this THEORY (!) WhatApp is actually cross-financed by governments, so it can stay online as the biggest communication surveillance "device" in human history. We are talking about a 100% uptime free service that literally has become the center of human remote communication in major parts of the world.
Encryption is a shady topic, and there is a realistic chance there is a backdoor in the methods WhatApp uses to encrypt content, history has shown this is realistic.
Governments have done way worse things.
Encryption is a shady topic, and there is a realistic chance there is a backdoor in the methods WhatApp uses to encrypt content, history has shown this is realistic.
Governments have done way worse things.
By being part of Facebook, gathering data about whom you communicate with (that works even with end-to-end encryption), combining this with the profile Facebook has about you, and selling this data to third parties.
By using WhatsApp, you become their product, and they are making money with you.
By using WhatsApp, you become their product, and they are making money with you.
WhatsApp is a loss leader that allows Facebook to infer the social graphs of people through their contacts list (even those that are not Facebook users) which they can then monetize, either directly (if they are Facebook users, by showing better-targeted ads) or indirectly (by using non-Facebook users as "gateways" to infer relationships between existing Facebook users which would then be used to better target ads).
Facebook would like to see money from WhatsApp but it was far more important to them to block off a potential competitor.
WhatsApp could have provided services like Facebook or Instagram but cost a small amount of money each year. Maybe it would be per-user or maybe it would be a sponsorship, like what Discord is doing. Sponsor the local neighborhood group for $25/year, your high school class forum for $100/year (so you can show everybody "you made it big").
The key to doing something like that is network effects, which WhatsApp had in spades.
Probably it's inevitable that they would have descended into advertising and tailoring the site for advertisers instead of users.
WhatsApp could have provided services like Facebook or Instagram but cost a small amount of money each year. Maybe it would be per-user or maybe it would be a sponsorship, like what Discord is doing. Sponsor the local neighborhood group for $25/year, your high school class forum for $100/year (so you can show everybody "you made it big").
The key to doing something like that is network effects, which WhatsApp had in spades.
Probably it's inevitable that they would have descended into advertising and tailoring the site for advertisers instead of users.
At the moment Zero. WhatsApp on its own doesn't make any money at all. Apart from some meta data about you and your contact.
But WhatsApp on itself doesn't cost much to run. They had 1B user and was running it on 50 Big FreeBSD Box. With a tiny engineering team. And that was with Hardware and Software from 6 - 7 years ago. Modern Hardware with all the BEAM VM improvement would made it even lower. ( Kind of Amazing if you think about it )
But WhatsApp on itself doesn't cost much to run. They had 1B user and was running it on 50 Big FreeBSD Box. With a tiny engineering team. And that was with Hardware and Software from 6 - 7 years ago. Modern Hardware with all the BEAM VM improvement would made it even lower. ( Kind of Amazing if you think about it )
I tried looking up many online articles and didn't get a satisfying answer.