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It’s been almost a decade since Facebook founder Mark Zuckerberg shocked the tech world, announcing his company’s agreement to spend $19 billion on WhatsApp, a popular messaging app with a tiny business.

Since then, WhatsApp has remained somewhat of an anachronism. Usage has continued to grow, with more than 2 billion people now counting on the app to chat with friends and family, up from 450 million at the time of the acquisition. But it’s still not much of a moneymaker.

Unlike Instagram, which Facebook bought in 2012 for the much tidier sum of roughly $1 billion, WhatsApp doesn’t show ads, which is Zuckerberg’s core business. It’s also unrelated to his company’s hugely expensive pivot to the metaverse or its effort to catch up to TikTok with its short video product, Reels.

But the company now known as Meta has no intention of sidelining WhatsApp. Rather, Zuckerberg regularly touts the value of the asset and its potential to expand, boasting on Meta’s latest earnings call about the 200 million people who use the WhatsApp Business app, which helps companies communicate with clients. He told CNBC’s Jim Cramer in June 2022 that WhatsApp represents the “next chapter” for Meta.

To parlay its massive user base into a product that contributes in a big way to the bottom line, WhatsApp needs more large businesses across the globe to rely on the service as a main way to converse with customers. For each conversation, companies pay in the range of a half-cent to 15 cents, depending on the kind of chat and the country in which the exchange takes place.

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“It’s been clear for many years that people are trying to connect with businesses on WhatsApp,” said Alice Newton-Rex, the unit’s product director, in an interview with CNBC. “If you go to India or Brazil and you look around, you’ll see WhatsApp numbers posted up in shop windows everywhere. This is how businesses want to engage with their customers.”

Consumers in India, for example, use WhatsApp to book Uber rides and get movie recommendations on their Netflix accounts.

Newton-Rex joined WhatsApp four years ago, leaving her high-level position at London-based financial firm WorldRemit for the new gig. At the time, WhatsApp only had 15 product managers, a number that’s since ballooned to 90.

The product group is now tasked with building features that can unlock WhatsApp’s business in a substantial way and in helping WhatsApp fulfill the potential that Zuckerberg has long seen in the app.

Newton-Rex said Zuckerberg has been “a big part of the team,” adding that he regularly speaks with Will Cathcart, the current head of WhatsApp.

“He’s a big part of our strategy,” she said about Zuckerberg’s support of WhatsApp and its road map.

WhatsApp’s popularity around the world is undeniable. In countries like Brazil, India and Indonesia, people use it to chat with family and friends and stay updated on current affairs. There’s particular appeal in countries that historically lacked robust telecommunications infrastructure, as WhatsApp has made it feasible for people in those regions to affordably communicate via smartphone.

“Back in 2009, it was extremely expensive to send a text message, and if you wanted to make a call or particularly an international call, that might set you back hundreds of dollars,” Newton-Rex said. “WhatsApp changed all that.”

Newton-Rex recalled the time a member of the app’s research group compared WhatsApp to oxygen.

“I think the idea that it’s sort of everywhere and it’s effortless to use, you maybe don’t think too deeply about using it, but you would be in real trouble if someone took it away,” she said.

What’s up with WhatsApp’s business?

Former WhatsApp CEO and co-founder Jan Koum

David Ramos | Getty Images

In the years after the Facebook deal, Koum and Acton reportedly clashed with executives over issues related to data privacy and monetizing WhatsApp. Acton left in 2017, and Koum followed him out the door a year later.

It’s not just an issue of privacy and morals. As Williamson noted, WhatsApp’s core function as an encrypted platform for people to send each other private messages isn’t particularly “conducive to advertising.” Does a user really want a McDonald’s promotion to pop up alongside private messages with family members?

Yet throughout its almost two decades, Facebook has never had much of a business outside of ads, even as it’s expanded into consumer gadgets and the metaverse and, in the case of WhatsApp, getting companies to pay for messaging.

The plan is five years in the making. Meta kick-started its WhatsApp Business app in 2018, pitching it as a way for companies to more easily communicate with users through verified commercial accounts and a suite of in-app tools. In June, Meta said the WhatsApp Business app had quadrupled in the past three years to 200 million monthly active users.

Small companies can use the app for free or, depending on the country, pay a monthly subscription for added features like the ability to build a WhatsApp website, and to access a corporate account on up to 10 devices. Larger companies can pay for more expansive messaging campaigns and features to help them provide more customer service and support to big audiences via the WhatsApp Business platform.

With the upper-tier service, Meta charges per conversation, and the fee varies. In Brazil, for instance, a brief authentication conversation in which users are prompted to enter one-time passcodes for verification could cost a company 3.15 cents, while more complicated and extended marketing conversations detailing new promotions or special deals may cost 6.25 cents.

Meta said in its most recent annual report that sales in the company’s “Family of Apps-other revenue” segment, which houses the WhatsApp Business platform and other revenue sources like the net fees Meta receives from developers using its payment infrastructure, grew 12% year over year to $808 million in 2022.

While companies can’t run online ads on WhatsApp, they can buy a special kind of ad that’s now core to WhatsApp’s business strategy called “click-to-message,” which essentially redirects Instagram and Facebook users to WhatsApp to initiate an immediate conversation, Newton-Rex said.

Mark Zuckerberg told the world in October 2021 that he was rebranding Facebook to Meta as the company pushes toward the metaverse.

Facebook | via Reuters

It’s a strategy Meta is deploying more broadly. Zuckerberg said last year that the company’s click-to-message ad products running across WhatsApp, Messenger and Instagram are generating about $9 billion in annualized revenue. Most of those sales stem from the company’s Messenger app, which was first to offer that type of ad, but Zuckerberg said that the WhatsApp-specific click-to-message ads “just passed a $1.5 billion run rate, growing more than 80% year over year.” Meta says that all rolls up to total ad revenue and is not housed within WhatsApp.

More recently, Zuckerberg said during Meta’s first-quarter 2023 earnings call that the company’s click-to-message ads reached $10 billion in annualized revenue and added that “paid messaging on WhatsApp — has grown by 40% quarter over quarter,” without giving a revenue figure.

In addition to the newer ad products, Newton-Rex also highlighted WhatsApp’s Channels feature, which Meta debuted in June. The new tool, which is akin to a similar feature available in the Telegram messaging app, is intended to function like a “private broadcast service,” separate from the core WhatsApp messaging that takes place between friends and family members. It lets organizations and power users create their own channels to send messages or post updates and polls to large groups of people.

Although Channels is currently only available in a few countries, including Colombia and Singapore, Newton-Rex said Meta has bigger plans in store for the product and is considering ways to make money from it.

“Maybe you’ll be able to subscribe to a channel and you’d pay a small fee to hear from a news outlet or some celebrity who you cared about,” Newton-Rex said. “That could include also allowing channel owners to promote their own channel in our directory.”

As a broadcast tool, Channels isn’t an encrypted service. In the future, WhatsApp may allow groups like nonprofits or health organizations to ensure communications are encrypted for user or patient protection, the company said.

In looking for other ways to make money from Channels, ads could be an option, as there’s now a way for companies to run promotions without forcing them into a stream of confidential messages.

“We’re looking at a whole range of different monetization opportunities,” Newton-Rex said. “We haven’t fixed on any one thing yet.”

Cracking the U.S.

For all of Meta’s focus on WhatsApp expansion, the U.S. remains an elusive market, even though it’s a huge part of the parent company’s business. In the latest quarter, the U.S. and Canada combined accounted for 45% of Meta’s revenue.

According to Insider Intelligence data released in May, WhatsApp user penetration around the world was the highest in Spain, Italy and Argentina. In each country, at least 80% of internet users accessed WhatsApp once a month or more. In the U.S., that number was just 21.8%.

Still, Newton-Rex called North America WhatsApp’s “fastest-growing region,” without elaborating.

Researchers have found that the people in the U.S. most likely to use WhatsApp come from immigrant communities with extended family in other countries. The Pew Research Center has previously detailed that WhatsApp is the most popular messaging app used by Hispanic Americans.

For “a lot of people around the world who don’t use so many different internet services, WhatsApp is their gateway into having interactions on the internet,” Newton-Rex said.

Because WhatsApp uses encryption technology, it’s also attractive for people in countries with more repressive government regimes, while consumers in the U.S. are generally comfortable using Apple’s iMessage as well as direct messages on Facebook and X, formerly known as Twitter.

Newton-Rex said part of WhatsApp’s marketing strategy in the U.S. focuses on the app’s encryption technology, because data privacy often “comes up as an absolute top concern” for users. Last year, the company debuted a major promotional campaign highlighting WhatsApp’s encryption features.

Meta has been hammered in recent years by a number of data privacy blunders, such as the Cambridge Analytica scandal, scarring the company’s reputation.

“People really do know how important end-to-end encryption is,” Newton-Rex said. “They know that they don’t want their messages to be vulnerable to hackers, criminals, oppressive governments or anyone else who’s trying to listen in.”

Meanwhile, as Meta and other tech giants pour billions of dollars into generative artificial intelligence, Zuckerberg recently said his company plans to include more advanced chatbots into WhatsApp and other messaging tools.

Newton-Rex said Meta’s push into generative AI could assist in the development of more kinds of “business applications.”

“I think that messaging is going to be the main way that people interact with generative AI in future,” she said. “Imagine being able to have a really easy, instant, real-time conversation whenever you wanted to get customer service or to buy something with a business who you wanted to transact with. But it’s not just business applications.”

The global business messaging space is currently worth about $32 billion and is dominated by SMS, or short message service, technology that’s used to send things like status updates on airplane flight changes, Mobilesquared’s Lane said.

Lane said WhatsApp has the opportunity to offer more compelling ways for businesses to communicate with customers beyond short, simple text messages.

“For example, if you’re a restaurant, you can put your whole menu, different pages of your menu on WhatsApp,” Lane said. “The experience that you can have on a website or on an app, you can now have that within the messaging experience.”

That looks like a far-off promise, at least in the North American market. Williamson from Insider Intelligence said she does “not see any leap in usage of WhatsApp in the U.S.” in the near future.

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Mark Zuckerberg slams Apple on its lack of innovation and ‘random rules’

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Mark Zuckerberg slams Apple on its lack of innovation and 'random rules'

Meta CEO Mark Zuckerberg appears at the Meta Connect event in Menlo Park, California, Sept. 25, 2024.

David Paul Morris | Bloomberg | Getty Images

Meta CEO Mark Zuckerberg slammed rival tech giant Apple for lackluster innovation efforts and “random rules” in a lengthy podcast interview on Friday.

“On the one hand, [the iPhone has] been great, because now pretty much everyone in the world has a phone, and that’s kind of what enables pretty amazing things,” Zuckerberg said in an episode of the “Joe Rogan Experience.” “But on the other hand … they have used that platform to put in place a lot of rules that I think feel arbitrary and [I] feel like they haven’t really invented anything great in a while. It’s like Steve Jobs invented the iPhone, and now they’re just kind of sitting on it 20 years later.”

Zuckerberg added that he thought iPhone sales were struggling because consumers are taking longer to upgrade their phones because new models aren’t big improvements from prior iterations.

“So how are they making more money as a company? Well, they do it by basically, like, squeezing people, and, like you’re saying, having this 30% tax on developers by getting you to buy more peripherals and things that plug into it,” Zuckerberg said. “You know, they build stuff like Air Pods, which are cool, but they’ve just thoroughly hamstrung the ability for anyone else to build something that can connect to the iPhone in the same way.”

Apple defends itself from pushback from other companies by saying that it doesn’t want to violate consumers’ privacy and security, according to Zuckerberg. But he said that the problem would be solved if Apple fixed its protocol, like building better security and using encryption.

“It’s insecure because you didn’t build any security into it. And then now you’re using that as a justification for why only your product can connect in an easy way,” Zuckerberg said.

Zuckerberg said that if Apple stopped applying its “random rules,” Meta’s profit would double.

He also took shots at Apple’s Vision Pro headset, which had disappointing U.S. sales. Meta sells its own virtual headsets called the Meta Quest.

“I think the Vision Pro is, I think, one of the bigger swings at doing a new thing that they tried in a while,” Zuckerberg said. “And I don’t want to give them too hard of a time on it, because we do a lot of things where the first version isn’t that good, and you want to kind of judge the third version of it. But I mean, the V1, it definitely did not hit it out of the park.”

“I heard it’s really good for watching movies,” he added.

Apple did not immediately respond to a request for comment from CNBC.

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Why Meta had to ‘bend the knee to Trump’ ahead of his inauguration

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Why Meta had to 'bend the knee to Trump' ahead of his inauguration

Jakub Porzycki | Nurphoto | Getty Images

Mark Zuckerberg’s announcement this week that Meta would pivot its moderation policies to allow more “free expression” was widely viewed as the company’s latest effort to appease President-elect Donald Trump. 

More than any of its Silicon Valley peers, Meta has taken numerous public steps to make amends with Trump since his election victory in November.

That follows a highly contentious four years between the two during Trump’s first term in office, which ended with Facebook — similar to other social media companies — banning Trump from its platform.

As recently as March, Trump was using his preferred nickname of “Zuckerschmuck” when talking about Meta’s CEO and declaring that Facebook was an “enemy of the people.”

With Meta now positioning itself to be a key player in artificial intelligence, Zuckerberg recognizes the need for White House support as his company builds data centers and pursues policies that will allow it to fulfill its lofty ambitions, according to people familiar with the company’s plans who asked not to be named because they weren’t authorized to speak on the matter.

“Even though Facebook is as powerful as it is, it still had to bend the knee to Trump,” said Brian Boland, a former Facebook vice president, who left the company in 2020.

Meta declined to comment for this article.

In Tuesday’s announcement, Zuckerberg said Meta will end third-party fact-checking, remove restrictions on topics such as immigration and gender identity and bring political content back to users’ feeds. Zuckerberg pitched the sweeping policy changes as key to stabilizing Meta’s content-moderation apparatus, which he said had “reached a point where it’s just too many mistakes and too much censorship.”

The policy change was the latest strategic shift Meta has taken to buddy up with Trump and Republicans since Election Day.

A day earlier, Meta announced that UFC CEO Dana White, a longtime Trump friend, is joining the company’s board.

And last week, Meta announced that it was replacing Nick Clegg, its president of global affairs, with Joel Kaplan, who had been the company’s policy vice president. Clegg previously had a career in British politics with the Liberal Democrats party, including as a deputy prime minister, while Kaplan was a White House deputy chief of staff under former President George W. Bush.

Kaplan, who joined Meta in 2011 when it was still known as Facebook, has longstanding ties to the Republican Party and once worked as a law clerk for the late conservative Supreme Court Justice Antonin Scalia. In December, Kaplan posted photos on Facebook of himself with Vice President-elect JD Vance and Trump during their visit to the New York Stock Exchange.

Joel Kaplan, Facebook’s vice president of global policy, on April 17, 2018.

Niall Carson | PA Images | Getty Images

Many Meta employees criticized the policy change internally, with some saying the company is absolving itself of its responsibility to create a safe platform. Current and former employees also expressed concern that marginalized communities could face more online abuse due to the new policy, which is set to take effect over the coming weeks. 

Despite the backlash from employees, people familiar with the company’s thinking said Meta is more willing to make these kinds of moves after laying off 21,000 employees, or nearly a quarter of its workforce, in 2022 and 2023. 

Those cuts affected much of Meta’s civic integrity and trust and safety teams. The civic integrity group was the closest thing the company had to a white-collar union, with members willing to push back against certain policy decisions, former employees said. Since the job cuts, Zuckerberg faces less friction when making broad policy changes, the people said.

Zuckerberg’s overtures to Trump began in the months leading up to the election.

Following the first assassination attempt on Trump in July, Zuckerberg called the photo of Trump raising his fist with blood running down his face “one of the most badass things I’ve ever seen in my life.”

A month later, Zuckerberg penned a letter to the House Judiciary Committee alleging that the Biden administration had pressured Meta’s teams to censor certain Covid-19 content.

“I believe the government pressure was wrong, and I regret that we were not more outspoken about it,” he wrote. 

After Trump’s presidential victory, Zuckerberg joined several other technology executives who visited the president-elect’s Mar-a-Lago resort in Florida. Meta also donated $1 million to Trump’s inaugural fund.

On Friday, Meta revealed to its workforce in a memo obtained by CNBC that it intends to shutter several internal programs related to diversity and inclusion in its hiring process, representing another Trump-friendly move.

The previous day, some details of the company’s new relaxed content-moderation guidelines were published by the news site The Intercept, showing the kind of offensive rhetoric that Meta’s new policy would now allow, including statements such as “Migrants are no better than vomit” and “I bet Jorge’s the one who stole my backpack after track practice today. Immigrants are all thieves.”

Recalibrating for Trump

Zuckerberg, who has been dragged to Washington eight times to testify before congressional committees during the last two administrations, wants to be perceived as someone who can work with Trump and the Republican Party, people familiar with the matter said.

Though Meta’s content-policy updates caught many of its employees and fact-checking partners by surprise, a small group of executives were formulating the plans in the aftermath of the U.S. election results. By New Year’s Day, leadership began planning the public announcements of its policy change, the people said. 

Meta typically undergoes major “recalibrations” after prominent U.S. elections, said Katie Harbath, a former Facebook policy director and CEO of tech consulting firm Anchor Change. When the country undergoes a change in power, Meta adjusts its policies to best suit its business and reputational needs based on the political landscape, Harbath said. 

“In 2028, they’ll recalibrate again,” she said.

After the 2016 election and Trump’s first victory, for example, Zuckerberg toured the U.S. to meet people in states he hadn’t previously visited. He published a 6,000-word manifesto emphasizing the need for Facebook to build more community.

The social media company faced harsh criticism about fake news and Russian election interference on its platforms after the 2016 election.

Following the 2020 election, during the heart of the pandemic, Meta took a harder stand on Covid-19 content, with a policy executive saying in 2021 that the “amount of COVID-19 vaccine misinformation that violates our policies is too much by our standards.” Those efforts may have appeased the Biden administration, but it drew the ire of Republicans.

Meta is once again reacting to the moment, Harbath said.

“There wasn’t a business risk here in Silicon Valley to be more right-leaning,” Harbath said.

While Trump has offered few specific policy proposals for his second administration, Meta has plenty at stake.

The White House could create more relaxed AI regulations compared with those in the European Union, where Meta says harsh restrictions have resulted in the company not releasing some of its more advanced AI technologies. Meta, like other tech giants, also needs more massive data centers and cutting-edge computer chips to help train and run their advanced AI models.

“There’s a business benefit to having Republicans win, because they are traditionally less regulatory,” Harbath said.

Meta’s CEO Mark Zuckerberg reacts as he testifies during the Senate Judiciary Committee hearing on online child sexual exploitation at the U.S. Capitol in Washington, U.S., January 31, 2024. 

Evelyn Hockstein | Reuters

Meta isn’t alone in trying to cozy up to Trump. But the extreme measures the company is taking reflects a particular level of animus expressed by Trump over the years.

Trump has accused Meta of censorship and has expressed resentment over the company’s two-year suspension of his Facebook and Instagram accounts following the Jan. 6 attack on the Capitol.

In July 2024, Trump posted on Truth Social that he intended to “pursue Election Fraudsters at levels never seen before, and they will be sent to prison for long periods of time,” adding “ZUCKERBUCKS, be careful!” Trump reiterated that statement in his book, “Save America,” writing that Zuckerberg plotted against him during the 2020 election and that the Meta CEO would “spend the rest of his life in prison” if it happened again.

Meta spends $14 million annually on providing personal security for Zuckerberg and his family, according to the company’s 2024 proxy statement. As part of that security, the company analyzes any threats or perceived threats against its CEO, according to a person familiar with the matter. Those threats are cataloged, analyzed and dissected by Meta’s multitude of security teams.

After Trump’s comments, Meta’s security teams analyzed how Trump could weaponize the Justice Department and the country’s intelligence agencies against Zuckerberg and what it would cost the company to defend its CEO against a sitting president, said the person, who asked not to be named because of confidentiality.

Meta’s efforts to appease the incoming president bring their own risks.

After Zuckerberg announced the new speech policy Tuesday, Boland, the former executive, was among a number of users who took to Meta’s Threads service to tell their followers that they were quitting Facebook. 

“Last post before deleting,” Boland wrote in his post.

Before the post could be seen by any of his Threads followers, Meta’s content moderation system had taken it down, citing cybersecurity reasons. 

Boland told CNBC in an interview that he couldn’t help but chuckle at the situation. 

“It’s deeply ironic,” Boland said.

— CNBC’s Salvador Rodriguez contributed to this report.

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Apple’s market share slides in China as iPhone shipments decline, analyst Kuo says

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Apple's market share slides in China as iPhone shipments decline, analyst Kuo says

Jaap Arriens | Nurphoto | Getty Images

Apple is losing market share in China due to declining iPhone shipments, supply chain analyst Ming-Chi Kuo wrote in a report on Friday. The stock slid 2.4%.

“Apple has adopted a cautious stance when discussing 2025 iPhone production plans with key suppliers,” Kuo, an analyst at TF Securities, wrote in the post. He added that despite the expected launch of the new iPhone SE 4, shipments are expected to decline 6% year over year for the first half of 2025.

Kuo expects Apple’s market share to continue to slide, as two of the coming iPhones are so thin that they likely will only support eSIM, which the Chinese market currently does not promote.

“These two models could face shipping momentum challenges unless their design is modified,” he wrote.

Kuo wrote that in December, overall smartphone shipments in China were flat from a year earlier, but iPhone shipments dropped 10% to 12%.

There is also “no evidence” that Apple Intelligence, the company’s on-device artificial intelligence offering, is driving hardware upgrades or services revenue, according to Kuo. He wrote that the feature “has not boosted iPhone replacement demand,” according to a supply chain survey he conducted, and added that in his view, the feature’s appeal “has significantly declined compared to cloud-based AI services, which have advanced rapidly in subsequent months.”

Apple’s estimated iPhone shipments total about 220 million units for 2024 and between about 220 million and 225 million for this year, Kuo wrote. That is “below the market consensus of 240 million or more,” he wrote.

Apple did not immediately respond to CNBC’s request for comment.

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