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How Facebook Makes Money Out of WhatsApp Messenger?

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WhatsApp was founded about 6 years ago.

It came in and quickly established itself as a major instant messaging app, serving as a top alternative to the traditional SMS.

Eventually, this app took over the reins from the traditional SMS and it is now the ultimate messenger when it comes to sending and receiving messages. The good thing with this app is that unlike the traditional SMS, the users can include videos, photos as well as voice recordings in their messages. You can even share your location and contacts with other WhatsApp users, which makes it very easy to find you from whatever location you are using Google Maps or Apple Maps. WhatsApp can be installed on all major mobile operating systems that include iOS, Android, Symbian, Windows Phone and BlackBerry.

On February 19th 2014, Facebook paid a whopping $19 billion to acquire the services of this application. While at that time many saw Zuckerberg to be a mad man, it is only until now that many have started realizing what a genius this man is. In a year’s time, the app has more than doubled its user base and added in a flurry of features that the original developers of the app never intended to include. All these efforts are not just to please the users of the app, but according to The Zuck himself, it is very interesting to do business with a billion people and WhatsApp is almost there, with only less than 200 million people shy of this 1 billion mark.

How Facebook earns from WhatsApp

Well, at the moment, there is only one means through which Facebook uses to earn revenue out of this messenger. WhatsApp is a free to download messenger. However, this free period is only a year long. After this, all users must pay a fee of $0.99 in each of the years they keep using WhatsApp for messaging and calling services.

Currently, WhatsApp has more than 800 million users from all over the world and if it was assumed that all of these persons pay for the app (which is not that possible since there will always be new users), Facebook would be making around $800 million in a year.

Facebook may be tempted to introduce the ability to call the non-users of the apps and other applications such as Skype, Viber, Hangouts and LINE; however, this might require users to part with some little cash, just like with the cases of ViberOut and SkypeOut. Furthermore, the recent introduction of B2C communication in Facebook Messenger has suggested that WhatsApp will also be adopting the same strategy since both apps are under one arm. Since there are businesses already using this app for different business purposes, it would be easier to integrate this service and in this way, businesses will be able to pay Facebook for using this tool to communicate with their clients.

Bottom line

When Facebook bought WhatsApp for $19 billion, it clearly had entrepreneurial reasons behind this move. The company had seen the trend in the market and since most of its competitors have an IM of their own, it saw acquiring WhatsApp as the best move. It seems WhatsApp is following in the footsteps of its current owner, where the Facebook web client never monetized the site in its initial stages; instead, it attracted more users first before it started getting back its revenue. This is also expected to work in favor of WhatsApp Messenger.