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How Kik Messenger’s Shutdown Could Affect Facebook

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Canadian company Kik Interactive has shut down its chat app, Kik Messenger. And according to Kik founder and CEO Ted Livingston, the company also plans to shrink its workforce significantly, from more than 100 workers to just 19. Kik’s namesake app competes with Facebook’s (FB) WhatsApp.

Kik Messenger shutdown reduces competition for Facebook’s WhatsApp

Kik Messenger launched in 2010. In 2016, Kik had attracted more than 300 million users and claimed to have reached 40% of US teens. While Facebook’s WhatsApp boasts a larger audience, of 1.5 billion users, Kik has been one of its toughest challengers. In terms of user engagement, Kik is only one step below WhatsApp. Kik ranks above Facebook’s Instagram, Snapchat, Twitter, and Facebook’s Messenger in terms of user engagement.

Therefore, Kik’s shutdown could benefit Facebook by reducing competition for WhatsApp. And this couldn’t come at a better time. Facebook is gearing up to monetize WhatsApp by selling WhatsApp ads next year. It’s also about to launch a WhatsApp payment service, for which it’s eyeing a $1.0 trillion market in India.

Kik remains a threat to Facebook’s Libra project

The Kik Messenger shutdown doesn’t eliminate all of Facebook’s obstacles. Kik is focusing on developing its cryptocurrency product, Kin. The Verge reports that by shutting down its app and reducing its workforce, Kik could preserve resources for the SEC legal battle it’s facing over Kin. The dispute is “over whether its initial coin offering (ICO) should count as a security,” according to The Verge.

The Kin cryptocurrency could present a threat to Facebook’s cryptocurrency, Libra. More than a dozen companies, including PayPal and Uber Technologies, support Facebook’s Libra project. However, Kin is already a popular cryptocurrency, and Facebook is just getting started with Libra. According to Kik, Kin boasts close to 3.0 million active earners and spenders. Facebook is counting on Libra to expand its ad business and open a new revenue stream.

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