PS: I'd be happy to pay them $1/month because a significant part of my communication happens over WhatsApp. The challenge is $1/month is probably too pricey for most of their user base.
* I pay $60/mo for my AT&T line. I do the majority of my communication over WhatsApp. In that sense, WhatsApp adds more value to my life than AT&T. There are a group of users who'd be willing to pay more for that value.
* For most users, WhatsApp is an integral part of how they communicate with friends, family, doctors, coworkers, etc. As a consumer, it isn't just an "app" but an integral part of their communication flow.
* WhatsApp is respected by international telcos. I know at least for the telcos in my home country that they'd be happy to charge for WhatsApp subscription as part of their packages.
I think the primary problem was that even if WhatsApp could monetize $1-3/yr per user on average, it still wouldn't have met FB's revenue expectations.
The prospect of ad revenue is a bonus.
Most WhatsApp users aren't American, and in a lot of places $1 is a more significant price tag. That aside though, some places don't have the infrastructure or trust to even allow any sort of online payment to happen: a lot of people in India don't have credit cards, and being from Mexico myself, I know a lot of people who do don't trust online transactions enough to pay with it online.
If you think you need tens of millions of dollars annually to run a chat client at scale, no.
[1] https://help.openstreetmap.org/questions/9867/what-is-annual... (OpenStreetMap infrastructure costs less than $100k/year)
> I would ask for proof people would be outraged. Google and Facebook have used their overwhelming first world profits to fund internet ventures in the third world, and no one is outraged over the actions except for the blatant colonialism the actions represent.
Well, obviously you can't prove a hypothetical, but the "outrage" suggested here isn't about for-profit companies funding charities. It's about being charged even minimal amounts for services. Google and Facebook do not charge users for their core services, so they are not good comparison points.
Users were paying for Whatsapp [1]. I believe that data point illustrates that users would pay $1/year for a chat service, but this is just an opinion until someone decides to stand up a new service and charges for it.
[1] The evolution of WhatsApp - in rumours and revenues WhatsApp had dabbled with the subscription revenue model in 2014, which amounted to charging an annual $0.99 membership fee, and earned above $1 billion in the first nine months of instating this fee. But following their $19-billion acquisition by Facebook, they came to revoke these charges, and WhatsApp was a free ride for its one-billion-strong and counting user base again."
I was born and raised in a third world country and 99% of my family and friends still live there. Our GDP per capita is around $1,000 (yearly figure). I know people with children who make no more than $150 per month and cannot afford their own apartment. I know people who make even less. I know people who live in villages and probably have a monthly budget of no more than $80-$100.
Yet I have very rarely met people who somehow aren't spending at least $5 per month on their phone bill (buying minutes).
In fact I was very surprised to find that not only nearly everyone has a mobile phone, BUT phone service was more expensive than they are in the US. For example one hour at an internet cafe will set you back 50 cents. Yet everyone has a mobile phone, about half have a smartphone (granted a cheaper version of Android) and people buy internet connection left and right. In America, you walk into any coffee shop, get a free water, a free internet connection and a Thank You.
I say this to say, that WhatsApp could charge $2 per month and most people will happily pay it.
It would be more valid to compare it to carrier text messaging fees, which was the arbitrage opportunity they exploited. But that opportunity is mostly gone now that everyone has smartphones. If WhatsApp charged $2/month they would face the same challenge from upstart apps that carriers faced from WhatsApp.
The only reason WhatsApp exists is that international carriers were charging higher fees for text messaging while offering lower data rates, creating an arbitrage opportunity. WhatsApp never took off in the U.S. because U.S. carriers were ahead of the curve in shifting to free texting (thanks to the iPhone popularizing unlimited consumer data plans). So yes, this puts a hard ceiling on what WhatsApp could charge.
And that makes them feigning they thought they could justify a $19B valuation without increasing monetization all the more ridiculous. Of course they knew what would happen. That's why the deal was "if you monetize we vest all our stock and leave and cry out loud all the way to the bank," not "you can't monetize."