By Prarthana Mitra
In a dramatic turn of events, WhatsApp’s founders have decided to split with social media giant Facebook, three years after Mark Zuckerberg’s blockbuster acquisition of the global messaging service. After a long dispute over how to generate more revenue with ads and data, WhatsApp creators Jan Koum and Brian Acton have announced their resignations and are walking away leaving about $1.3 billion on the table.
What lies behind this messy, expensive split?
The merger between WhatsApp and Facebook seemed like a fairytale on paper, especially after the latter’s proposal to buy the global messaging app for $22 billion back in 2014. They even painted their Menlo Park Office in the WhatsApp green before inviting WhatsApp employees to work alongside them.
But soon enough, mismatched priorities and misaligned principles entrenched in culture clashes surfaced when it became apparent that Koum and Acton were not ready to compromise their value systems at the behest of Zuckerberg and Facebook COO Sheryl Sandberg. “It worked for Instagram,” Sandberg told the WhatsApp executives on at least one occasion, according to an anonymous source close to the matter.
Considering that ads drive 97% of Facebook’s revenue, it wouldn’t be an exaggeration to call that targeted business its lifeblood. When WhatsApp refused to renege its pledge to remain ad-free or give up its obsession with user privacy, pretty workplace squabbles about toilets, noise and desks ensued.
Here’s what happened
For the first two years after the purchase, WhatsApp eased into the transition by operating autonomously. Relationships began to deteriorate in 2016 when Facebook decided to limit ads in users’ news feeds and thus started looking elsewhere for revenue. Eyeing WhatsApp’s large user base, Facebook has been known to constantly urge them to be more flexible and faster with several revenue generation models. Pushing for assimilating the smaller company into Facebook’s larger culture especially by integrating ads into their service, Facebook may have posed a direct threat to WhatsApp core values and autonomy.
Koum and Acton’s disdain for the potential of the commercial applications of the service may have been responsible for the split. In the end, it has become exceedingly clear that WhatsApp under the duo was an incongruous fit within Facebook and the affair was doomed right from the start.
Closer home, the launch of WhatsApp Pay in India, scheduled for this week, has been delayed due to Facebook’s data privacy concerns, which has the RBI and telecom regulators on tenterhooks in the wake of the Cambridge Analytica scandal.
Facebook-owned WhatsApp continues to be the world’s leading messaging app, although it remains to be seen if a massive restructuring and rebranding is in the offing.
Prarthana Mitra is a staff writer at Qrius.
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