WhatsApp and Facebook have a complex relationship. In 2014, Facebook acquired WhatsApp for $19 billion. Since then, the two companies have worked to integrate their services while still operating as separate apps. There has been much speculation about how much data Facebook can access from WhatsApp and whether the two share resources. Overall, Facebook and WhatsApp work closely together in some areas but still operate as distinct services in many ways.
Facebook’s Acquisition of WhatsApp
In February 2014, Facebook announced its plans to acquire WhatsApp in a deal valued at $19 billion. At the time, WhatsApp had 450 million monthly active users. Facebook likely saw WhatsApp as a way to extend its reach, particularly in emerging markets where WhatsApp was popular.
The high price tag showed how valuable Facebook believed messaging apps could be to its business. Some key points about the acquisition:
- It was Facebook’s largest acquisition to date, dwarfing the $1 billion paid for Instagram in 2012.
- WhatsApp would continue to operate as an independent app with its existing team.
- WhatsApp co-founder Jan Koum joined Facebook’s board of directors as part of the deal.
Critics expressed concern about the privacy implications of Facebook owning WhatsApp data. However, Facebook claimed it would not collect WhatsApp user data for advertising.
Integration Post-Acquisition
Initially, Facebook and WhatsApp continued to operate as completely separate products. But over time, Facebook has worked to integrate the two services:
Linking Accounts
In 2016, Facebook made it possible to link Facebook and WhatsApp accounts using phone numbers. This allowed Facebook to track WhatsApp usage to some extent.
Unified Infrastructure
Facebook migrated WhatsApp’s infrastructure to its own centralized systems. This means WhatsApp now uses Facebook data centers and servers.
Shared Resources
Facebook teams provide engineering support and tools for WhatsApp. This helps WhatsApp improve features by leveraging Facebook’s resources.
Product Integration
Facebook has added some integration between the apps:
- WhatsApp statuses can be shared to Facebook Stories.
- Users can message WhatsApp accounts from Messenger.
Facebook likely wants deeper integration but has moved slowly to avoid regulatory pushback.
Data Sharing Between Facebook and WhatsApp
One major question is how much user data is shared between the two companies. Facebook claimed it would not collect WhatsApp data to improve ad targeting. Here are the key facts on their data sharing:
No Data Sharing Initially
For the first few years after the acquisition, WhatsApp did not send any data to Facebook. WhatsApp continued to operate independently.
Start of Data Sharing in 2016
In August 2016, WhatsApp updated its terms of service to allow some data sharing with Facebook:
- Phone numbers used to verify WhatsApp accounts could be checked against Facebook’s systems.
- WhatsApp could share analytics data with Facebook on how users interacted with the service.
This allowed Facebook to identify duplicate accounts and get insights on WhatsApp usage.
Increased Data Sharing in 2021
In early 2021, WhatsApp updated its privacy policy to share more types of data with Facebook:
- Profile data such as name and photo
- Status message information
- Device identifiers
However, WhatsApp cannot see people’s messages or hear calls due to end-to-end encryption.
Using Data to Improve Ads
Facebook can now use WhatsApp data to improve ad targeting and measurement on Facebook. But it still cannot use WhatsApp data directly for ads.
Data Shared With Third Parties
WhatsApp may share data with third-party Facebook partners. But data is aggregated or anonymized first.
WhatsApp’s Level of Independence
While Facebook and WhatsApp clearly share resources and data, WhatsApp still operates fairly independently in key areas:
Separate Corporate Entities
WhatsApp is still an independent company within Facebook. It has its own offices and corporate team.
Management Autonomy
Founder Jan Koum served on Facebook’s board until 2018. He reportedly left over disagreements around data privacy.
Own Income Streams
WhatsApp generates revenue from a small business API, not Facebook ad sales. Its revenue covers costs.
Distinct Product Experience
The WhatsApp product remains focused on simple messaging rather than newsfeeds and ads.
End-to-End Encryption
WhatsApp’s encryption prevents Facebook from accessing message content. This is a major privacy difference from Facebook products.
So while Facebook influences WhatsApp’s direction, WhatsApp still retains a degree of autonomy. But Facebook likely wants deeper integration wherever regulators allow it.
User Base Differences
Despite being owned by the same parent company, WhatsApp and Facebook have important user base differences:
Non-Overlapping Audiences
There is relatively small overlap between Facebook and WhatsApp’s active user bases. Most people use them as complementary apps.
| App | Monthly Active Users |
|---|---|
| 2.8 billion | |
| 2 billion |
WhatsApp’s Global Reach
WhatsApp is more popular than Facebook in many countries, especially in Latin America, Africa, and Asia.
Demographic Differences
In the US, WhatsApp skews more towards Hispanic and international users. Facebook has broader demographic appeal.
Engagement Levels
People tend to use WhatsApp in a more personal way for daily messaging. Facebook usage is more passive and sporadic.
Strategic Motivations Behind the Acquisition
There were likely several key strategic reasons why Facebook acquired WhatsApp:
1. Neutralize a Competitor
WhatsApp was the clear global leader in mobile messaging. Buying WhatsApp allowed Facebook to absorb a major rival.
2. Expand Into New Markets
WhatsApp gave Facebook a stronger footprint in emerging international markets, along with access to more diverse demographics.
3. Drive More Mobile Usage
Facebook likely wanted to be on the forefront of the global shift to mobile messaging apps over traditional social media.
4. Complement Facebook’s Products
WhatsApp offered a simpler, more intimate messaging experience compared to Facebook and Messenger at the time.
5. Bolster Data on User Behavior
Facebook knew WhatsApp data would enrich its understanding of how people communicate, even if it couldn’t use the data for ads initially.
Regulatory Challenges
Facebook has faced scrutiny from regulators in multiple countries regarding how it handles WhatsApp user data:
European Union
In 2017, the EU fined Facebook $122 million for providing misleading information about its ability to link WhatsApp and Facebook user identities.
India
India is WhatsApp’s biggest market. In 2021, India enacted new social media regulations for platforms like WhatsApp.
Germany
Germany banned Facebook from processing WhatsApp data in 2017. But this ban was overturned by a European Court ruling.
United Kingdom
The UK is also investigating how Facebook uses WhatsApp data. Fines may result from non-compliance with UK data protection laws.
United States
US regulators like the FTC have pressured Facebook to limit data sharing between WhatsApp and Facebook. But no major punitive actions have occurred yet.
Conclusion
In summary, Facebook and WhatsApp operate closely together in some areas but remain distinct products in other ways:
- Facebook acquired WhatsApp in 2014 but WhatsApp still functions as an independent app.
- Some back-end infrastructure and anonymous analytics data are now shared.
- Data sharing has increased over time, allowing Facebook to improve ads.
- WhatsApp retains management autonomy and its own revenue streams.
- The two apps appeal to different global demographics.
- Facebook’s strategic reasons for acquiring WhatsApp included neutralizing a rival, expanding reach, and increasing data.
- Regulators have challenged Facebook on its handling of WhatsApp user data.
While Facebook influences WhatsApp’s direction, WhatsApp still operates fairly independently. But Facebook will likely continue increasing integration where possible, raising ongoing privacy concerns for users.