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Comment by mbesto | Hacker News Reader

> It's scope that increases headcount, not users.

100% And adding a way to accept payments (which WhatsApp never really did) and have functionality for businesses is an increase in scope. So, 50 engineers is terribly understaffed for an economically sustainable business.

For example, Facebook, Twitter, Uber, etc. have hundreds of engineers who literally just work on how the company gets paid. And no, this isn't just "well they can just insert Stripe.js into their app" - it's way more complicated than that.

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this is an important observation. if wathsapp wasn't subsidized by facebook and had to start pay-walling their app, then they would have lost market share and universality and the network effects that go with it, and they would have to be continually iterating on the app to optimize the monetization (in terms of driving away the fewest number of users) and to add features to compete with other competitors, who would be much more prevalent if whatsapp was not universally free. whatsapp is further subsidized in emerging markets by facebook paying carriers to give users free data for facebook apps. without monetization that subsidy would not exist, and once again you would have far more competition, that would require more engineering to respond to.

WhatsApp did have people pay some trivial annual fee before they were bought by Facebook. IIRC, it was free for the first year after which people presumably knew whether it was worth ~$2 per year to them. Perhaps that fee wasn’t economical but 900M * $2 covers 50 engineers pretty easily. I don’t have a good estimate for whether it would cover bandwidth or other staff for liaising with police in every country or whatever.

i never used it back then, so i never had to pay a fee, but the fee was $1 per year according to https://venturebeat.com/mobile/whatsapp-subscription/ and the fee was only being charged in some countries, and not in India and "many other developing countries." actual revenue might have been more like 100M * .7 (after app store take) so $70 million per year, which might be barely profitable.

if they hadn't sold to FB, FB or another company would have run them out of business by doing the same loss-leading advertising and subsidies for their own product that they did for WA.

I would assume WhatsApp would pick a price such that they could continue to offer the first year for free. Maybe it’s tricky for technical reasons for some users to pay $1 but I would assume that most users (in middle or high income countries) would find it affordable and reasonable. It seems to me that being free to try is a necessary condition for a competitor to be successful but being free forever is neither necessary nor sufficient.

i would argue that being free is not even enough to be competitive long term. the problem is that because messaging is very cheap and easy to implement and is a service that almost everyone uses it is in the best interest of companies like FB to actually pay people to use their service (which is what they do with WA) in order to prevent competitors from building a user base that could be used to compete with their core monetized apps. apple and google are essentially doing the same thing, giving away their proprietary messaging apps for free, and giving them highly valuable real estate on their platforms in order to win/keep market share, and they have even more power than fb, because they can change the platform, introduce new protocols, etc, to give themselves a competitive advantage. microsoft was willing to spend billions to give skype away for free for the same reasons.

free is not a guaranteed winner if you have three trillion dollar companies paying people to use their competitive products and they control the platforms that your app runs on.

I’ll add to this—the more paying users you have, the more it makes sense to have more different ways to get payment. If you have 10k users then you may not be able to justify the cost of accepting additional forms of payment besides. Facebook can add new forms of payment and get enough additional revenue to justify the cost.

As a note, WhatsApp is able to accept payments, just not in every country. In Brazil, that's a feature.

You can send money through it (not sure how it's implemented on the backend) but Brazilians still don't pay for whatsapp

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