Facebook, [Brian Acton, a founder of WhatsApp] says, had decided to pursue two ways of making money from WhatsApp. First, by showing targeted ads in WhatsApp’s new Status feature, which Acton felt broke a social compact with its users. “Targeted advertising is what makes me unhappy,” he says. His motto at WhatsApp had been “No ads, no games, no gimmicks”—a direct contrast with a parent company that derived 98% of its revenue from advertising. Another motto had been “Take the time to get it right,” a stark contrast to “Move fast and break things.”
Facebook also wanted to sell businesses tools to chat with WhatsApp users. Once businesses were on board, Facebook hoped to sell them analytics tools, too. The challenge was WhatsApp’s watertight end-to-end encryption, which stopped both WhatsApp and Facebook from reading messages. While Facebook didn’t plan to break the encryption, Acton says, its managers did question and “probe” ways to offer businesses analytical insights on WhatsApp users in an encrypted environment.
Facebook’s plans remain unclear. When Sandberg, Facebook’s COO, was asked by U.S. lawmakers in early September if WhatsApp still used end-to-end encryption, she avoided a straight yes or no, saying, “We are strong believers in encryption.” A WhatsApp spokesperson confirmed that WhatsApp would begin placing ads in its Status feature next year, but added that even as more businesses start chatting to people on the platform, “messages will remain end-to-end encrypted. There are no plans to change that.”
For his part, Acton had proposed monetizing WhatsApp through a metered-user model, charging, say, a tenth of a penny after a certain large number of free messages were used up. “You build it once, it runs everywhere in every country,” Acton says. “You don’t need a sophisticated sales force. It’s a very simple business.”
Acton’s plan was shot down by Sandberg. “Her words were ‘It won’t scale.’ ”I called her out one time,” says Acton, who sensed there might be greed at play. “I was like, ‘No, you don’t mean that it won’t scale. You mean it won’t make as much money as . . . ,’ and she kind of hemmed and hawed a little. And we moved on. I think I made my point. . . . They are businesspeople, they are good businesspeople. They just represent a set of business practices, principles and ethics, and policies that I don’t necessarily agree with.”