How does WhatsApp makes money if it is free?

WhatsApp is a free instant messaging, video call service created by Brian Acton and Jan Koum in January 2009. The app gained instant popularity all over the world and was acquired by Facebook in 2014 for $16 billion. After Facebook taking control, whatsApp quickly grew to 1 billion active users in 2016 and that number is continuously rising.

WhatsApp is easily downloadable on iPhone, Android and other smartphones and works only with Internet for sending instant messages, making ‘free‘ video calls. The messages are sent by using end to end encryption meaning only sender and receiver can read the messages, ensuring users privacy.

Initially whatsApp was thought to be a pay to use app. It would cost $1 per year after using it free for first year, or so was the plan but never came into existence. The company announced on their blog in 2016, putting end to annual subscription charges. It is also believed that Facebook acquired WhatsApp to gather the user data it would capture but the end to end encryption made it literally impossible.

So now the question is, if WhatsApp is free how does the company work?

Knowing that WhatsApp cannot read your personal messages and the information entered into WhatsApp cannot be shared on any other platform owned by Facebook, the revenue generated from WhatsApp is a 1 tricky question.

It seems like, the company is more focused on growing the user base from 1billion to many more in the future and the primary objective is to make money from selling software and services. Earlier this year in September, WhatsApp announced that it would be working on making this app a business friendly app saying,

‘We want to apply what we’ve learned helping people connect with each other to helping people connect with businesses that are important to them.’

Right now, WhatsApp is not making any money on its own like many other messaging apps such as its biggest Chinese competitor WeChat that is financially independent with revenues around ¥151.9 billion.

Just like WeChat, WhatsApp is introducing new features such as making payments within the app, introducing WhatsApp for businesses. It remains to be seen in the future if WhatsApp thinks about introducing Ad models into the chat, videos.

According to Forbes, WhatsApp could make from $5 billion to nearly over $15 billion in the coming years if it adapts the correct monetization strategy.

The article originally appeared on Metro UK

Written by Hisham Sarwar

That is all you ever need to know about me but let me warn you, freelancing for me is a journey, certainly not a destination :)