WhatsApp will start allowing its users to communicate with businesses soon - a revenue model that will allow it to continue its ad-free interface that users love. The company has announced that it will not charge a subscription fee for its services anymore. So far, it had been charging users in most countries a $1 subscription fee, after a year of free usage. Regarding the thought process behind this move, the company blog stated.
As we've grown, we've found that this (paid) approach hasn't worked well. Many WhatsApp users don't have a debit or credit card number and they worried they'd lose access to their friends and family after their first year. So over the next several weeks, we'll remove fees from the different versions of our app and WhatsApp will no longer charge you for our service.
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No third party ads either
WhatsApp was founded by Brian Acton and Jan Koum in 2009. The company gained tremendous traction and raised about $58Million across three rounds, before being finally acquired for about $19 billion by Facebook in February 2014.
The main USPs of WhatsApp is its simplicity, user interface and the lack of ads, which has helped it gain amazing traction and reach 450 million monthly active users (at the time of acquisition). WhatsApp realises this and hence, doesn't plan to monetise through ads either. Regarding their business model, the company explains
Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organisations that you want to hear from. That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight. We all get these messages elsewhere today – through text messages and phone calls – so we want to test new tools to make this easier to do on WhatsApp, while still giving you an experience without third-party ads and spam.
Sector overview and YourStory take
This is an extremely bold move by WhatsApp that could have far reaching consequences for the B2B and B2C 'messaging' and 'chat-based assistant' industry. While it may have a minimal effect on WhatsApp's user base that has probably reached its peak, businesses will look at this opportunity as a 'gold mine' to leverage.
An interesting point to note here is that in the past, WhatsApp had banned businesses that were trying to game their platform and reach out to customers, without their (customer's) permission. One case in point, here. WhatsApp policies stated that businesses were not allowed to connect to users who hadn't saved their numbers in their phonebook. Many businesses have been requesting WhatsApp to open up their API for startups and other businesses to leverage.
This move by WhatsApp may have been inspired from parent company, Facebook Messenger's playbook. Messenger recently announced that it was opening up its app to businesses such as Uber to directly interact with customers. A popular player in China, WeChat has been following this strategy for sometime, with an 'app within an app' strategy to connect businesses with users.
As a fallout of this move, WhatsApp will now be competing with chat-based assistant apps such as Magic and Operator (founded by Uber Cofounder Garrett Camp).Closer home in India, businesses such as Haptik, HelpChat, Lookup too may start facing the heat. Some other emerging players in this space are Sequoia-backed Goodservice, Unilazr-backed Niki.ai, Bengaluru-based Goodbox and Indore-based Zootout. It will be interesting to see how WhatsApp goes about integrating businesses on its app and if it still retains its core DNA.
Recommended read from 2015: How Whatsapp is changing the way businesses work