Writer’s note: The entire article is just a theory and there is no conclusive evidence or proof to back this theory.
The online world is growing at a very rapid speed. Internet is now becoming the next necessity in a human’s life. As we are getting more and more dependent over this virtual internet world, the architects of that world are getting richer. Well, it is quite rational to think that no one makes an online application just for charity. There is a huge scope to earn through internet, and making online applications is one way.
Whatsapp is one such application which has done wonders to the world of internet. Communicating with our loves ones has never been so easy! One wouldn’t be surprised if you told them that whatsapp is one of the most famous mobile applications. Over the years, the application has just evolved and become better. With over 1 billion users and over 100 Million users joining the application every day, whatsapp become the biggest messenger application in the world! But well, we all still wonder, what is facebook getting by running whatsapp for free? How do they really earn? I’m going to remove the curtains from these questions today.
First of all, to understand how does whatsapp earn, let me first tell you how an online application does its business. Basically, there are 2 major ways of earning through an online application:
Now, with this I mean, many applications charge the users for downloading and operating the application. You cannot download those apps without paying for the same. Suppose you are purchasing an application from the android play story; the play store will keep a part of the amount you pay and forward the rest to the application developers. That is the most basic way to earn through online applications. Many applications do come at a cost!
The web world is a fast growing market; or rather the fastest growing market. People really pay a hefty sum to advertise on websites and applications. The application developers can include advertisements in their apps, and they are then paid as per a certain criterion, like number of downloads, number of active users or number of clicks on the advertisements. This is how most of the free applications earn, and trust me, they earn a lot!
Now, having told you the 2 most common ways for an app to earn, which one do you think whatsapp adopts? Answer is neither. Yes, for a while in few countries, whatsapp had a downloading cost, costing about 0.99 US Dollars. In few other countries, it was free for 1 full year, and the users were expected to spend a dollar to renew the services for one more year. However, now whatsapp is completely free for lifetime. So this option is no more viable for them.
Next, there has never been any kind of advertisement on whatsapp. They do not sell ads of now. So again, this isn’t the way they earn. So, how do they really do it? Why did facebook pay a huge sum of 19 Billion US Dollars to purchase an app that won’t earn them a penny? Well, whatsapp does earn and probably earns a lot. They do not sell ads, but they sell you to the advertisers.
Now, this is a new term that has come up. As I said, whatsapp sells you to the advertisers. How? All of our chat messages are stored on whatsapp servers and databases. Using all the words which we type, their database tries to figure out what kind of products we are interested in, our likes, dislikes, traditions, taste and what not! They sell this precious information to advertisers who are ready to pay huge sum for the same. The advertisers then use this data for targeted advertising purposes. It means you will be shown ads on different websites based on the predictions made with the help of the data collected by whatsapp and sold to the advertisers. You shall be shown more ads of the things you like, or the things which you would rather intend to buy and products of which you could be a potential customer. This is probably how whatsapp sells our chats and earns, or rather earns a lot!
Apart from this, the experts do believe that whatsapp could still be trying to penetrate the market. That means, by making the app available for free, they could be trying to increase their user base, and once satisfied; they might start charging the users for the application or might start displaying advertisements. It would be a smart move, because more the number of people join whatsapp, larger the chat circle gets, and with virtually everyone using whatssapp, it would become very difficult for a person to stop using the app. However, one can say that they have a virtual monopoly in their line of business, and so this theory can be doubted.
A Chartered Accountant , Parth Parikh is a 22 year old aspiring writer and entrepreneur. He loves to express his views on every topic on earth he is aware of! Passion in his veins, love in his heart and work on his mind keep him alive. Born with love for writing in his blood and having an experience of working with multiple websites, he now wishes to start a venture of his own in the form of Just Write Things.