It’s hard to think of a more extraordinary business deal than Facebook’s US$19-billion acquisition of WhatsApp in February 2014. Its creators were outliers. With a lean staff of just a few dozen people, they had no marketing department, no sign on the door and had spent zero cents from their sole investor, Sequoia Capital. But WhatsApp had 450 million users, mostly outside the US.
Founders Jan Koum and Brian Acton also hated ads. They’d spent a combined 20 years working at Yahoo bonding over their frustration with a business model that sucked up personal data to show us pop-ups. Building ad systems was “depressing”, Koum said in an interview in mid-2014. But not too depressing to sell their chat service to online ad magnate Mark Zuckerberg, CEO of Meta Platforms, just a few months later. Eight of WhatsApp’s roughly 50 employees made more than $100-million off that deal, while Koum gained a net worth of $6.8-billion.
Zuckerberg has long been under pressure to monetise WhatsApp, a prominent cash sink whose user base has soared
This week, just over a decade later, ads are finally coming to WhatsApp. They’ll appear in its Updates (formerly Status) tab, where users post images and videos. Advertisers will also be able to promote Channels there and collect thousands of followers. Meta described the roll-out as “gradual”, suggesting WhatsApp users will start to see ads over the coming weeks and months.
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Zuckerberg has long been under pressure to monetise WhatsApp, a prominent cash sink whose user base has soared to more than three billion but which has yet to pay its own way. Now, with Meta’s costly push into artificial intelligence, including a $14.3-billion investment in data labelling start-up Scale AI, the company is moving on the last big piece of real estate it can squeeze cash from. (Meta had already begun monetising WhatsApp through business messaging tools and click-to-WhatsApp ads on Facebook and Instagram, but this is the first time ads are appearing inside WhatsApp itself.)
Ads fly in the face of what WhatsApp’s founders wanted. For a few years after his extraordinary sale, Koum resisted efforts inside Facebook to feature ads on WhatsApp, his co-founder Acton later told me, while Acton himself tried to convince Sheryl Sandberg, then the company’s chief operating officer, to introduce a metered-user model. His idea was to charge users a tiny amount, perhaps a tenth of a cent, after a certain large number of free messages were expended and monetise WhatsApp that way.
The inevitable
Sandberg stuck by the ad model that already allowed Facebook to print money for years, telling Acton that his idea wouldn’t scale. By the time he left the company, Acton knew that he couldn’t stop the inevitable. “At the end of the day, I sold my company,” he said.
Still, both internal and public resistance to ads has been enough to make Meta’s monetisation plans for WhatsApp a fitful journey over the last decade. Meta’s chief marketing officer, Alex Schultz, admitted on LinkedIn that the company had announced ads a few times already. “This time it’s for real,” he added.
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Meta first publicly announced its intention to bring ads to WhatsApp Status back in November 2018, then put the plans on hold and nixed them in 2020, before announcing in 2023 that the roll-out was back on.
The U-turns are down to the staunch views of WhatsApp’s founders, who infused company culture even after they vested their stock options and left Meta. WhatsApp users are also accustomed to a clean, ad-free app that keeps their conversations private with end-to-end encryption. When the company tweaked its privacy terms in 2021 to add more business messaging features, many ditched it for rival apps like Signal and Telegram. Meta had to move slowly.
