The app acts as an alternative internet hub in many emerging markets — but can it make a profit?
Whether you are in the market for a nicely fattened goat from the United Arab Emirates or freshly caught fish in the port of Mangalore in India, you can place your order on WhatsApp.
The ping! ping! ping! of WhatsApp messages arriving on a smartphone has become the soundtrack of business in many emerging markets, as companies bypass phone calls and email to communicate with their customers. Governments have also turned to the app, using it to interact with citizens and appeal to voters.
From WhatsApp’s headquarters in Mountain View, California, Neeraj Arora has watched as businesses worldwide adopt the app. Cheaper than text messaging and using less data than other social apps, WhatsApp has attracted more than 1bn monthly active users in just over six years despite little fanfare and a relatively small team.
“In India and other parts, people don’t even know what email is, they never created email identities, they have just gone on to the internet on their phones,” says Mr Arora, WhatsApp’s head of business.
The app — which Facebook bought in 2014 for $22bn — is now looking for ways to generate revenue. It once charged a small subscription fee to some users but that was abandoned in January. Having promised its users that the service will have no advertising, gimmicks or games, it is looking at how to charge the small and medium-sized businesses that are using it to make sales every day.
Mr Arora says the company, still small and independently operated from Facebook, had not built the app for businesses. Now in the “super early” stage of monetisation, it is exploring commercial messaging.
So far, the company has made two big changes that appeal to businesses: increasing the sizes of groups they can message at once and developing WhatsApp for the web so people can access their messages on a desktop computer.
“Small mom ’n’ pop stores want to access WhatsApp for Web, fire up the laptop and use it,” says Mr Arora.
There is a technological hitch: WhatsApp wants to remain one of the most efficient apps in terms of data usage while also broadening into a platform full of useful, and potentially moneymaking, services.
Facebook Messenger has mimicked many elements of WeChat, the Chinese chat app, which allows its users to do everything from call a taxi to apply for a mortgage. Facebook Messenger now has 11,000 chatbots — computer programs that simulate human conversation — to communicate with businesses.
Benedict Evans, a partner at venture capital firm Andreessen Horowitz, says WhatsApp has been a great way for business to communicate with existing customers but it is far less effective than Facebook or Instagram at attracting new shoppers.
Mr Evans suggests that one option could be to develop a way to send money through the app; another would be to create a premium, paid-for option that would allow businesses to send richer messages. “They have to get quite creative,” he argues.
Facebook Messenger already has an option to make payments. WhatsApp has prided itself on its good security, rolling out end-to-end encryption to all users this year. Such security could help it if it wanted to introduce a way to send money.
WhatsApp may be fortunate at seeing businesses and their customers naturally adopt the messaging service, rather than having to create reasons for brands to interact in the app. Even governments might be persuaded to pay to further integrate WhatsApp into their infrastructure.
In the west, big brands from American Express to Disney have been eager to reach customers through services including Facebook Messenger, as consumers spend more time in these semi-private spaces. But it is a challenge to advertise in subtle ways that do not interrupt conversations.
Catherine Boyle, mobile analyst at eMarketer, says businesses had been working on creating fictional characters or personas to interact with customers.
“Businesses are attracted to messaging in general but they are also approaching with caution. It is a place where they have to be careful — they don’t want to irritate people.”
Fielding constituents’ complaints, reporting from the slums
Every morning Fernando Haddad, mayor of São Paulo, the most populous city in the southern hemisphere, looks at his phone with a sense of dread.
“There is a crisis every day here. Every day. I wake up at 6 in the morning and at 6 in the morning, or maybe at 7, I start receiving WhatsApp messages with the problems,” he explains. “I don’t remember a day when I woke up and there was nothing.”
More than 200 miles away in Rio de Janeiro, André Fernandes is also constantly checking his phone. The founder of the Favela News Agency relies on WhatsApp messages from hundreds of sources and journalists in the slums, who provide information on everything from police violence to forced evictions ahead of the Olympics.
“I have more than 20 groups on WhatsApp related to the favelas — that way I know what is happening in any favela in Rio at any given time,” he says, adding that access to social media has done more than any government programme or charity to protect the rights of the slums’ most vulnerable residents.
As a tool for both the country’s most powerful and most powerless, WhatsApp has become a great equaliser in Brazil. With an estimated 100m users the messaging service is the country’s most popular app — testimony to the fast growth of smartphone ownership even as the economy sinks into its deepest recession on record. In 2014-15, the number of households with a smartphone increased from 55.5 per cent to 60.3 per cent.
WhatsApp is as popular with the elderly as it is with the young. Cleide, a housewife from São Paulo, says her 87-year-old mother is an avid user. “She barely writes anything but she can’t wait to see more photos of her grandchildren and her great-grandchildren,” she says.
While politicians use the app to win over voters, law firms, doctors and businesses also rely on WhatsApp to communicate internally, as well as with clients and suppliers.
Even the country’s drug lords are fans, using it to trade weapons and cocaine — and monitor police activity. As a result, the app was briefly shut down in December and again this year over allegations that it was not co-operating fully with criminal investigations.
Brazilians reacted with anger at the time, but also with humour.
“Now that WhatsApp is blocked I found some people making noises with their mouths, I think it’s what they call ‘talking’,” joked one user on Twitter.
Locating hard-to-reach youths
Francis Gogo says WhatsApp has transformed his healthcare project for young people in Nairobi’s Kayole slum.
In 2010, he started a WhatsApp group for youths he was struggling to engage with on how they were handling living with HIV or how they could keep from becoming infected. “The number of young people wanting help was increasing rapidly but many did not want to attend therapy sessions,” he says. “On WhatsApp people can be anonymous but share information and seek advice.”
Mr Gogo, who works for the Ambassadors for Youth and Adolescent Reproductive Health Programme, says it took two years for the chat group to take off due to the high cost of smartphones. But as prices came down — smartphones now cost as little as $25 in Kenya — the group’s membership soared.
“We now also discuss reproductive health and other issues,” he says. “Every week we introduce a new topic and have doctors and other specialists in the group.”
Such stories are increasingly common in Kenya, known as the Silicon Savannah because of its role as a tech hub. Mr Gogo says he is a member of 10 WhatsApp groups and believes most of his friends belong to at least seven. There are even WhatsApp groups to discuss which WhatsApp groups to join.
Smartphone penetration in Kenya is about 20 per cent and rising fast WhatsApp vies with Facebook Messenger for the top spot in the country’s most downloaded app chart collated by App Annie, a data analytics website.
Steve Chege, corporate affairs director of Safaricom, Kenya’s dominant mobile operator says: “The introduction of services such as WhatsApp has been good for telcos in Kenya, as it is driving increased use and uptake of data both socially and from a business perspective.”
Wooing voters, alerting police to traffic jams
India’s general election had a new buzz in 2014, when Narendra Modi, the controversial Gujarat chief minister, took social media by storm to promote his promises of clean governance and economic growth.
A key part of the strategy was WhatsApp, which the Modi team used to send huge numbers of messages to potential voters. A report last year by India’s telecom regulator estimated that WhatsApp had more than 70m users in the country — a number that has probably risen substantially since, with India now a key source of growth for the global smartphone market.
The app, which rolled out Hindi language support two years ago, has won a following among many first-time smartphone users, says Virendra Gupta, chief executive of DailyHunt, a smartphone news app focused on non-English speakers. That has been helped by the fact that it automatically presents users with a list of all their phonebook contacts who use the app.
Mr Modi’s emphatic general election win set a precedent for the use of WhatsApp in politics. Last year his ruling party suffered a wounding state election defeat in Bihar, after its opponents bombarded voters with WhatsApp messages — a strategy overseen, ironically, by a departed senior member of Mr Modi’s general election campaign.
Mr Modi’s use of WhatsApp has gone beyond propaganda, however: last year he ordered the creation of a WhatsApp group to chivvy lawmakers who had been skipping parliamentary sessions.
Police forces across the country have embraced WhatsApp as a means for citizens to alert them to problems ranging from traffic jams to corrupt officers.
And its use in elections, too, has gone beyond attempts to sway voters. During last year’s regional polls in Jammu and Kashmir, security forces used the app to exchange messages, judging that its message encryption made it more secure than radio communication.
But that feature landed WhatsApp under scrutiny by India’s Supreme Court this year after an activist sought a ban on it, claiming that the new 128-bit encryption breached government rules intended to ensure emergency access to criminal suspects’ messages. The court ruled that the petitioner should take his case to a government tribunal.
Chatting with the doctor, reporting crimes
WhatsApp has taken off like a rocket in Mexico, where two-thirds of the population has internet access and more than three-quarters surf on smartphones.
While Facebook — often abbreviated to the phonetic Feis — remains the social media king, its appeal has waned. By contrast Whats, as its sibling is known, is used by eight out of 10 Mexicans with smartphones. No one gives you the side eye if you ask for the WiFi password in a bar or restaurant, and parks often have coverage, giving WhatsApp the edge in a country where texts are not always free.
Jaime Rodríguez, the social media-mad governor of Mexico’s northern state of Nuevo León, gave out his personal cell phone number and urged people to report crimes via WhatsApp. Indeed, he credited use of the app for a tipoff that helped catch a drug lord. In May, a kidnapped woman in the state of Chihuahua, who had hidden her phone in her clothes, was rescued after sending her location to the police on WhatsApp.
Government communiqués are sent to reporters via WhatsApp, and it is common for people to say: “I’ll give you my Whats. It’s easier for me.”
Like being able to surf the net for free in Starbucks, WhatsApp is a value-added perk Mexicans have embraced. Latin America’s number-two economy is the world’s second-biggest user, just behind South Africa.
Patients even use the app to chat with their doctors about their care. “You get treatment like in the States,” says an oncologist of Mexican healthcare. “But with WhatsApp too.”
Jan Koum, co-founder of WhatsApp
Ukrainian-born Jan Koum, 40, grew up in a rundown village outside Kiev, where his school didn’t have an indoor bathroom and he learnt mathematics on an abacus. When he left then-Communist Ukraine with his mother and grandmother in 1992 at the age of 16, he moved to California where he relied on food stamps.
His family struggled to stay in touch with relatives, including his father, who remained at home. When he left Yahoo to found WhatsApp in 2009, his goal was to make long-distance communication cheap and easy, and to protect the privacy of communications at all costs.