money market

How is WhatsApp Funded and Does it Generate Revenue?

WhatsApp was developed in early 2009 and was launched as an instant messaging app much later. Initially, WhatsApp charged a 1 dollar annual fee from its entire user base, in order serve a platform which is advertisement free. The first round of funding received by Whatsapp was $250k by yahoo friends, which were given a co-founder status in the app. While the second and third round of funding was served by the Sequoia capital that invested around $60 million dollars in this application, in 2011 and 2013 which remained the only source of income for the 50 employees of WhatsApp. Since there was not much expenditure they waived the 1 dollar subscription fee. They first created the network of users and then finally succeeded in 2014, when Facebook purchased WhatsApp for $19 billion, that was the biggest revenue hit for the application and all employees were put on Facebook payrolls.

How does WhatsApp generate a regular revenue now?

Well, after it was bought by Facebook, the money acquisition was changed. Facebook brought a lot of changes in the revenue model.  The WhatsApp business application has been launched which helps a company to build a business profile and become a verified business on WhatsApp. The business app is currently free, but its functionality has been extended by launching the first revenue earning product – Whatsapp Business API which is a feature to integrate business with an API helps to reach out to customers through notifications and deal with their queries.

So how does API make money?

There is a strategic revenue plan behind this, WhatsApp charges the business for slow replies, so they are able to reply to the user for free for up to 24 hours but will have to pay a fee for every message sent after 24 hours, the charges are fixed, but different for different countries, and there no loopholes, because an API number cannot be used for a business application so one can’t get away with it and not pay the fees.

That’s all about API other than that, WhatsApp has started with its payment option within the application for Indian users, which benefits WhatsApp business in the company’s biggest market.

There are speculations that WhatsApp might start advertisements and allow users to have paid ads, as it’s the most used platform and has the target audience potential. But it’s just a speculation, as of now there is no confirmation as the core idea behind WhatsApp was to create an ad-free instant messaging platform

In conclusion, WhatsApp does not really have a categorized revenue system or a daily revenue system per se, after waiving of the subscription fee there was no way that it could have a regular revenue system, it has been only the investments since the start and now it’s run by Facebook on its funding. Facebook has brought some significant changes in the revenue strategies and it feels like there is definitely more scope of improvement, to explore the potential of WhatsApp as a monetary application for the company.

As of now, Whatsapp is used as a platform to access the user’s behavioral data and personal information which so far is said to be not used for consumer targeting in advertisements, but that might change in the near future.

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