Facebook Takes First Step Toward Making Money From WhatsApp Deal

  • New privacy policy opens up service for texts from businesses
  • WhatsApp begins sharing more user data with Facebook
Photographer: Chris Ratcliffe/Bloomberg

Facebook Inc. is laying the groundwork for its free messaging service WhatsApp to begin making money, easing its privacy rules so data can be used for Facebook advertising and allowing businesses to message its more than one billion users. It’s the first step toward monetizing the platform since the social network’s Chief Executive Officer Mark Zuckerberg paid $22 billion for the app in 2014.

WhatsApp announced the change to its terms of service policy today. It allows businesses to communicate with users, including appointment reminders, delivery and shipping notifications and marketing pitches. In a corresponding blog post, WhatsApp said it will be testing the features over the coming months.

The policy shift may help WhatsApp generate revenue, but also could irk users drawn to its strong stance on privacy. After it agreed to be purchased by Facebook in 2014, co-founder Jan Koum pledged the deal wouldn’t change how the company handles user data. Now WhatsApp says it will begin sharing more information about its customers with the "Facebook family." The data, including a person’s phone number, could be used to better target ads when browsing Facebook or Instagram, WhatsApp said.

Facebook agreed to buy WhatsApp for $19 billion in 2014, but the deal price ultimately rose to $22 billion because of the social networks’ rising stock price. Investors have been anxious to see how Zuckerberg makes money from the deal. Several services in Asia, most notably WeChat in China, have successfully opened up their platforms so businesses can interact with customers. It’s a strategy Facebook has also been taking with the communication app, Messenger.

In its blog post, WhatsApp also reiterated its commitment to encryption, saying no outside parties are able to see what its users are saying to each other. The policy has put the company at odds with government authorities in the U.S. and Europe who want an ability to intercept the communication of potential terrorists.

"Our belief in the value of private communications is unshakeable," the company said.

Facebook shares, which have gained almost 20 percent this year, rose less than 1 percent to $124.16 at 1:24 p.m. in New York.

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