Facebook dropped WhatsApp’s subscription fee
WhatsApp cofounder Jan Koum is leaving Facebook (FB). Koum teamed up with Brian Acton to build WhatsApp and later sold the mobile messaging app to Facebook for ~$19 billion in 2014. Acton left Facebook last year.
Before selling to Facebook, WhatsApp made money by charging its users $1.00 per year, but the annual subscription fee was dropped shortly after Facebook took hold of the app. The move spurred a lot of questions because there was no clear alternative monetization plan, as WhatsApp’s founders didn’t favor advertising—Facebook’s primary source of revenue.
WhatsApp to be more open to advertisers
In an interview with CNBC after Koum disclosed that he was leaving Facebook, Facebook’s head of messaging products, David Marcus, said that WhatsApp would be more open to advertisers going forward. Koum is believed to have opposed the idea of running advertisements on WhatsApp, so he may have been viewed as a stumbling block in Facebook’s efforts to aggressively monetize the app.
WhatsApp reaches over 1.5 billion people
WhatsApp boasts more than 1.5 billion monthly active users, a bigger audience than Twitter’s (TWTR) 336 million monthly users. Snap (SNAP) said that 191 million people were using its Snapchat app daily as of the end of the first quarter of 2018.
Facebook’s advertising revenue rose 50% YoY (year-over-year) to $11.8 billion in the first quarter. Advertising revenue rose 62% YoY at Snap, 21% YoY at Twitter, and 24.3% YoY at Alphabet (GOOGL) in the quarter. Perhaps opening WhatsApp to advertisers could boost growth in Facebook’s advertising business and help the company guard against a loss of market share to the likes of Amazon (AMZN) and Verizon’s (VZ) Oath.