Who Owns WhatsApp Now and How Does It Make Money?
By Ambrish ShahJan. 14 2021, Published 12:13 p.m. ET
WhatsApp is a free social networking app. It allows users to send text and voice messages, make video and audio calls, and share documents, images, and user locations. The mobile app is available for Androids, iPhones, and desktops. Who owns WhatsApp now? How does the app work and make money?
Recently, WhatsApp announced that it's updating its privacy policies starting on Feb. 8. The company has received major backlash from users. Many WhatsApp users have started choosing alternative apps like Telegram and Signal.
Facebook owns WhatsApp
WhatsApp is the preferred mode of mobile phone communication for millions of people worldwide. The app allows users to send text messages and photos for free. WhatsApp was founded in 2009 by former Yahoo executives Jan Koum and Brian Acton. In June 2009, WhatsApp was released with a messaging component. The app's active users surged significantly to 250,000.
In February 2014, Facebook acquired WhatsApp for $19.3 billion. The messaging service was acquired for $4 billion in cash, $12 billion worth of Facebook shares, and $3 billion in restricted stock units to Koum and Acton. Facebook still owns WhatsApp. However, Koum and Acton are no longer associated with the messaging company.
WhatsApp became the most famous messaging app in the world by 2015. As of February 2020, the app had nearly 2 billion active users worldwide. WhatsApp is Facebook’s second-largest property, followed by Messenger and Instagram.
How WhatsApp works
WhatsApp analyzes a user's contacts list and figures out if any of the individual's family or friends have the app. The contacts are automatically added to the messaging app, which allows users to communicate for free. The service uses a Wi-Fi connection, 5G, or 4G instead of sending messages through SMS like traditional texting, which charges per message. The voice calling feature was introduced in 2015, while video calling was introduced in 2016.
WhatsApp’s primary feature is end-to-end encryption. The messages sent using the mobile app are only visible to the receiver and the sender of the message. However, the encryption was opposed by officials in the U. K., the U. S., and Sweden after they were blocked from accessing terror suspects' text messages.
How WhatsApp makes money
WhatsApp earns money through a subscription model. The messaging service asked users to pay $1 to download the app and then $1 each subsequent year to renew. In January 2016, WhatsApp scrapped the annual charge and made the app free.
WhatsApp makes money through two sources — WhatsApp for Business API and Click to WhatsApp ads. Uber and Netflix are among the major brands that use WhatsApp’s business messaging platform. The company also earns money by selling emoticons, stickers, and online games. WhatsApp plans to monetize the app by rolling out WhatsApp Payment. In 2020, WhatsApp’s estimated sales were about $5 billion, while the average revenue per user will likely be $4.
