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As much as Facebook tries to market itself as a warm and fuzzy company connecting friends and family, it is still a ruthless competitor not afraid to play hardball if that’s what it takes to win. For example, Facebook is currently sending out an ultimatum to all WhatsApp users: Accept our new terms of service, or never use this service again. Facebook (which owns WhatsApp) is quite aware that it might lose some users forever, but it’s worth the price of what it gets in return: access to the private data of those users.
The ultimatum from Mark Zuckerberg
According to the new terms of service being pushed on users, WhatsApp may share certain information and data about you with parent company Facebook. Primarily, this will be information about your interactions with businesses via WhatsApp. Thus, if a business sends you a message via WhatsApp (such as a reminder about an upcoming appointment), Facebook will gain access to this information. Facebook won’t be able to read the actual content of your messages on the platform, but it will know when you’ve had an interaction. And it will presumably know the overall context of that interaction. So, the big question becomes: What exactly does Facebook gain from this?
Integration of all messaging platforms with Facebook
One major priority at Facebook is the integration of all messaging platforms with Facebook. Users might think of WhatsApp and Facebook as being two completely different businesses and two completely different apps, but Mark Zuckerberg does not. As he sees it, Facebook paid out nearly $20 billion for WhatsApp in 2014, and he’s seen little or no return on his investment. WhatsApp produces no real revenue for the company, and there are no advertisements on WhatsApp. So the push is on to monetize WhatsApp, and the way to do that is by binding it even tighter to Facebook.
You see, the more that Facebook knows about you on WhatsApp, the more that it can show you highly contextual and relevant ads and offers on Facebook. Let’s say, for example, that you are in the market to buy a new product or service, and have agreed to receive messages from a local, brick-and-mortar retailer. Now, Facebook has some really good information that it can use. It may not know what you are talking about online, but it can probably surmise that if you are getting messages from a new car dealer, that you are in the market for a new car. Or, if you are getting messages from a real estate broker, that you are in the market for a new home. Or, if you are getting messages from a travel agent, that you are in the market for a new vacation. You get the idea here – by connecting a few dots and parsing all the other data that Facebook has already collected on you, Facebook can then leverage this data with advertisers.
In short, KA-CHING.
Facebook has suddenly found a way to monetize WhatsApp. And Facebook will be looking to do this with all of its other platforms – such as Messenger – as well. This integration of messaging platforms with Facebook comes at a particularly important time, since it is getting harder and harder for Facebook to leverage third-party data. So many companies are closing the data spigot for Facebook, and that is leading Facebook to turn to first-party data (i.e. data that Facebook already owns and does not need to acquire from other companies). Hey, even if Apple is making it a lot harder for Facebook these days as a result of its new App Tracking Transparency, Facebook still has options because it owns so many other online properties.
Business models and profitability
When viewed in this way, Facebook is not being evil or sinister. And while nobody enjoys playing hardball with a big, monolithic company, Facebook has a business model to protect. If it means keeping the advertising dollars flowing forever, than Facebook is willing to risk the ire and wrath of a few WhatsApp users. Hey, the company wasn’t making any money from those users anyway, right? That might sound cold and impersonal, but hey, it’s not personal, it’s just business.
