Here’s How Facebook Plans to Monetize Its $19 Billion WhatsApp Acquisition

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August 25, 2016 10:04am Nasdaq:FB

facebook-fb-logoFacebook Inc (NASDAQ:FB) raised more than a few eyebrows when it bought messaging app WhatsApp for a whopping $19 billion in February 2014.


Now the company is setting its sights on monetizing WhatsApp’s approximately 1 billion worldwide users. From Bloomberg:

Facebook Inc. is laying the groundwork for the free messaging service WhatsApp to begin making money, allowing businesses to message its more than one billion users. It’s the first step toward monetizing the platform since Facebook Chief Executive Officer Mark Zuckerberg agreed to pay $19 billion for the popular app in 2014.

WhatsApp announced a change to its privacy policy today that allows businesses to communicate with users. The messages could include appointment reminders, delivery and shipping notifications or marketing material, the company said in its revised terms of service. In a blog post, WhatsApp said it will be testing these business features over the coming months.

Users can pretty safely expect this to only be the beginning of an impending flood of ads on the messaging platform. Facebook recently hit peak ad saturation, meaning it has to look outside of its own platform now to create more ad inventory.

For its part, WhatsApp said it remains committed to user privacy:

In its blog post, WhatsApp also reiterated its commitment to encryption, saying no outside parties are able to see what its users are saying to each other. The policy has put the company at odds with government authorities in the U.S. and Europe who want an ability to intercept the communication of potential terrorists.

“Our belief in the value of private communications is unshakeable,” the company said.

With Facebook at the help, it remains to be seen how much longer privacy remains at the top of WhatsApp’s list of priorities.

FB-2016-08-25

Facebook shares were mostly flat at $123.56 in Thursday morning trading. Year-to-date, the world’s largest social networking company has risen 18%, more than doubling the performance of the S&P 500 in the same period.


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