How does WhatsApp make money?

In the last 24 hours I have written more than 100 WhatsApp messages.

None of them were very exciting. I made plans with my family, discussed work projects with colleagues, and shared news and gossip with some friends.

Maybe I need to do better, but even my most boring messages were encrypted by default, using WhatsApp’s powerful computer servers housed in various data centers around the world.

It’s not a cheap operation, and yet neither I nor any of the people I spoke to yesterday have ever spent any money to use it. The platform has almost three billion users worldwide.

How does WhatsApp – or Zapzap as it is called in Brazil – make money?

Admittedly, it helps that WhatsApp has a huge parent company behind it – Meta, which also includes Facebook and Instagram.

Individual, private WhatsApp accounts like mine are free because WhatsApp makes money from corporate customers wanting to communicate with users like me.

Since last year, companies have been able to set up free channels on WhatsApp and send messages that can be read by anyone who decides to subscribe.

What they do pay a premium for, however, is access to interactions with individual customers through the app, both conversational and transactional.

The UK is comparatively still in its infancy here, but in the Indian city of Bangalore, for example, you can now buy a bus ticket and choose your seat via WhatsApp.

“If we do all this right, our vision is that a company and a customer should be able to do things properly in a chat thread,” says Nikila Srinivasan, vice president of business messaging at Meta.

“That means if you want to book a ticket, if you want to make a return, if you want to make a payment, you should be able to do that without ever leaving your chat thread. And then you just go back to all the other conversations in your life.”

Businesses can now also choose to pay for a link that starts a new WhatsApp chat directly from an online ad on Facebook or Instagram to a personal account. Ms. Srinivasan tells me that this alone is now worth “several billions of dollars” to the tech giant.

Other messaging apps have taken different approaches.

Signal, a platform known for its industry-standard message security protocols, is a nonprofit organization. It says it never took money from investors (unlike the Telegram app, which relies on them).

Instead, it relies on donations – including a $50m (£38m) cash injection from Brian Acton, one of WhatsApp’s co-founders, in 2018.

“Our goal is to come as close as possible to fully supporting small donors, relying on large numbers of modest contributions from people who care about Signal,” its president, Meredith Whittaker, wrote in a blog post last year.

Discord, a messaging app primarily used by young gamers, has a freemium model – signing up is free, but additional features, including access to games, come with a price. It also offers a paid membership called Nitro with benefits like high-quality video streaming and custom emojis for a monthly subscription of $9.99.

Snap, the company behind Snapchat, combines several of these models. It runs ads, has 11 million paid subscribers as of August 2024, and also sells augmented reality glasses called Snapchat Spectacles.

And it has another trick up its sleeve: According to the website Forbes, the company earned nearly $300 million between 2016 and 2023 solely from interest. However, Snap’s main source of revenue is advertising, which brings in more than $4 billion per year.

UK-based Element requires governments and large organizations to use its secure messaging system. Its customers use the technology, but run it themselves on their own private servers. The ten-year-old company generates “double-digit million sales” and is “close to profitability,” its co-founder Matthew Hodgson tells me.

He believes the most popular business model for messaging apps remains the perennial favorite of the digital age: advertising.

“Basically [many messaging platforms] Sell ​​advertising by watching what people do, who they talk to, and then target them with the best ads,” he says.

The idea is that even with encryption and anonymity, the apps don’t need to see the actual content of the messages shared to find out much about their users, and can then use that data to sell ads.

“It’s the old story: if you don’t pay as a user, you’re probably the product,” adds Mr Hodgson.