News this week that the WhatsApp messaging app would start sharing some user data with parent company Facebook stirred up a dust storm of media coverage.
After all, when the popular mobile messaging service was bought by Facebook in 2014, WhatsApp co-founder and CEO Jan Koum told users the $19 billion deal would have no effect on the service's signature policy to keep their personal communications completely private and ad-free -- a core appeal of the app.
WhatsApp's decision to now collect user account data, including phone numbers and the last time subscribers used the service, has raised serious questions about how exactly the new policy -- the service's first modification in four years -- does or does not impinge on user privacy. The official policy update has spawned primers on how to opt out; debates on whether it's really possible to opt out and in which countries, given the global footprint of WhatsApp's 1 billion customers; and speculation about what kind of backlash to expect from that massive fan base -- more on that later.
"This is what Facebook does. They will launch an app -- Facebook.com; they will work hard for years on end to gain adoption and user engagement. Once they get to a certain point, the app becomes big enough to sustain a proper business model," said Gartner analyst Brian Blau. "That is where they are at with WhatsApp."
Two years after Facebook's investment in WhatsApp, the mobile messaging service's 1 billion or so user base has reached the critical mass Facebook deems necessary to be able to "branch out," Blau said, and lay the groundwork for opening the messaging service to marketers and changing the user experience.
In a win-win way, of course. As the WhatsApp blog post put it: "... we want to explore ways for you to communicate with businesses that matter to you, too, while still giving you an experience without third-party banner ads and spam."
Mobile messaging apps and the quest for 'mobile moments'
"This is the first step for Facebook to start monetizing the huge investment it made in WhatsApp," said analyst Thomas Husson, who covers messaging apps for Forrester Research.
"To stick to WhatsApp's DNA, Facebook will not introduce third-party ads in the short to medium term, but will instead harness data to improve marketing effectiveness on the big blue app and other Facebook properties," he said. Facebook currently is focusing on Facebook Messenger as its "relationship platform" for brands, he added. But WhatsApp's strong presence in countries where Messenger has limited reach could well mean the company "will replicate the [business] model" in WhatsApp.
Focusing strictly on when and how Facebook monetizes WhatsApp, however, is missing the forest for the trees, he and other industry watchers said.
Mobile messaging services represent a massive shift in how people -- some 3 billion and counting -- are spending what the industry calls their mobile moments. "This is simply a place where consumers are spending a lot of time and a key opportunity to drive customer relationships," Husson said.
Forrester colleague Jennifer Wise, who covers emerging marketing tactics, said mobile messaging platforms will, in time, become an important part of mobile marketing and customer service for companies. Digital overload is beginning to drive consumers to consolidate their digital connections, she said, and the WhatsApp messaging app and others -- like Line, KakaoTalk, WeChat -- have been successful in capturing large chunks of consumer mobile moments.
"They are creating this ecosystem where they own a lot of that customer's time, so brands have to figure out how to integrate with them to get in front of that customer," Wise said. Pushing a customer to a company website and inviting them to "browse and find what you want" is very different from the "let's have a conversation" experience Millennials, in particular, expect to have with brands in their mobile moments.
"By becoming a core touch point for consumers, [mobile messaging services] are beginning to alter the customer-brand relationship by mediating some of [the] moments and changing what those moments look like," she said.
WhatsApp messaging app: To-do list for CIOs
Gartner's Blau said there's plenty for CIOs to chew on regarding the rise of mobile messaging services. He underscored a few points: First, it represents a change in how consumers are using technology devices and the apps that go on them, something about which CIOs need to stay abreast. "Messaging apps are becoming -- and even now are -- a favored way people communicate," he said.
"I'm not saying email is going away; email is still there and social websites are still there, but messaging apps are a very convenient way to send a quick message to somebody," he said. The messaging platforms represent a potential opportunity to reach consumers through ads or direct services (as WeChat of China does). "It is going to be an important platform for them over the coming years."
At some point, CIOs may even want to use these messaging platforms as tools for their own employees. People want to use common apps and devices in the workplace. It makes sense to use something employees are already on, if CIOs can keep the data secure and if the device fits the need of what employees want to do, he said.
Communications on messaging app services are more private than public. "That should be important for CIOs, because public data they have access to; private data they don't. Having more private conversations means more restrictive access to user data," he said.
So, what backlash can we expect from WhatsApp users who don't want their private communication channels opened up to business?
"The evidence that we have is that there will be backlash and it will have absolutely no effect. That's what's happened before when Facebook has had privacy issues," Blau said. True to its business model, he hastened to add, Facebook will listen, make adjustments, change a default button, add a feature and -- because the app has reached critical mass -- will weather the storm. "It wouldn't be Facebook if it didn't do those things."
CIO news roundup for week of Aug. 22
- be_TOMORROW. That's the theme of the VMworld 2016 U.S. conference beginning Sunday at the Mandalay Bay Resort and Casino in Las Vegas. The four-day event is expected draw more than 23,000 attendees and will feature more than 400 breakout sessions from VMware, its partners and customers. This year's conference will focus on the state of cloud and digital business -- with compute virtualization, DevOps, networking and storage among the hot topics -- and has over 220 sponsors and exhibitors, including Dell, EMC, Hewlett Packard Enterprise, Intel and NetApp.
- Google Daydream. The search giant's Android-based software platform for virtual reality, which developers promise will deliver "rich, responsive and immersive experiences," could be released in the coming weeks, Bloomberg reported Tuesday. "As developers and designers, we are excited to build social experiences that are fun and easy to use -- but it's just as important to make it safe and comfortable for all involved," said Robbie Tilton, user experience designer for Google VR, in a blog post. YouTube, HBO Now and Hulu are among the many apps that will be available via Daydream. Google unveiled its mobile VR platform at its I/O developer conference in May, and Android Nougat -- an update to Android software that will support Daydream -- was released Aug. 22.
- IPhone 7 rumors. The new iPhone is set for release next month, and rumors are flying about the latest model's features. According to reports from The Wall Street Journal, Apple has plans to get rid of the headphone jack, as well as the 16 GB option, possibly making the 32 GB model the new starting point for an entry-level iPhone. The iPhone 7 Plus is expected to sport a dual-lens camera to help take more detailed and brighter images. Both iPhone 7 and 7 Plus are likely to come preinstalled with the latest version of Apple's mobile operating system software, iOS 10. In other iPhone news, an Israel-based company, NSO Group, reportedly created a hacking tool that targets iPhones, leading Apple to issue a software update Thursday.
- Self-assembling phones. Can a cell phone build itself without human intervention or automation? That's a question that research scientists at MIT's Self-Assembly Lab are trying to answer. "If you look at how things are manufactured at every ... scale other than the human scale -- look at DNA and cells and proteins, then look at the planetary scale -- everything is built through self-assembly," Skylar Tibbits, director and founder of the lab, told Fast Company. The researchers have already built a preliminary prototype and are looking into possibilities of programming a cell phone to build itself using a few parts and an energy source.
- Dell-EMC merger nears close. The largest tech acquisition in history cleared its last hurdle after it received approval from Chinese regulators, the New York Post reported last Friday. Dell reportedly applied for antitrust approval from Chinese authorities in February.
Assistant editor Mekhala Roy contributed to this week's news roundup.
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