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Interview Question: How does Whatsapp provide Free Services?

This question was asked to me by Chhatar Singh Board

How does Whatsapp provide Free Services?

People from IT background should be prepared for such a questions. Can anyone take up this question and attempt to answer this?
*No good deed goes unpunished* | I am no knight, do not call me Sir | I write articles for Civil Services Aspirants, you can find them at http://blog.forumias.com/author/neyawn |


  • Neyawn said:

    This question was asked to me by Chhatar Singh Board

    How does Whatsapp provide Free Services?

    People from IT background should be prepared for such a questions. Can anyone take up this question and attempt to answer this?

    start up ... becamet hit... purchased by facebook .. so creator earned..
    now facebook is running it , so no problem of financing the servers...
    now its turn of fb...
    ....in long run fb may change its policy and ad may be shown in it ....
  • This questions has two aspects - technical and economic.
    Question can be looked in these two ways.
    1. How does they provide free calling and messaging:
    Answer to this question can be simply given as they provide service by using the internet. Internet does not
    discriminate between data, whether it is message or call or something else. You may also provide more technical
    answer to this question like different layers of internet and how ip address and mac address are used, etc. You
    can google this information easily if interested.
    2. How does whatsapp provide free services economically:
    Answer to this question is that Facebook has sufficient fund to survive without advertisements. They are trying to
    increase their user base (market) and get more customers. Recently promotion of basic services by FB can be
    quoted as one example. This model is followed by many firms nowadays. Ola/Uber/paytm/snapdeal/ etc. all
    these companies are following the same business model. But soon they have to think about some stream to
    earn the profit.

    It seems person who asked the question is more interested in economic aspect. But more clarification can be asked during the interview.
  • The main thing is the data. It is the next thing. All the data is collected and that is purchased by big companies. Whatsapp is solely run on this.
    It is Job Hi Karwalo .. not Jo Bhi Karwalo.... mind it
  • I also collected info on this as can be asked to IT/CS guys...
    The revenue generation for Whatsapp is primarily through database management. All the conversations on Whatsapp are backed up on Whatsapp servers constantly. Our conversations reflect our interests, likes, dislikes and majorly depicts our preferences. This information is invaluable to big firms where relevant tailor made products can be offered after data sorting.
    It is Job Hi Karwalo .. not Jo Bhi Karwalo.... mind it
  • edited January 2016
    "WhatsApp is not the product. You are the product"

    WhatsApp's revenue comes through two streams -
    1. Subscription fee -
    WhatsApp charges fee for downloading the app (only for iOS :p ). Also, it gets revenue from deals with platforms like Google Playstore

    2. Investment-
    Many firms (like Sequoia Capital) invest in WhatsApp, giving it the much required capital.
    And finally, Facebook bought WhatsApp for $19Billion - more than enough to keep it advertisement free for years to come.

    The question is, why would companies want WhatsApp so much? Well, the data generated by user chats in WhatsApp (including photos and videos) is used by the firms to find out user preferences, which in turn is very valuable for companies that wish to sell them their products. When users sign up for WhatsApp, they give it the permission to use their data for such purposes (didn't read the Agreement now, did you? :p . And FYI- user data is subjected to California's laws and not the laws of user's nation). So, for example, if you post pic/video or mention in chat that you are looking for sports shoes, you might just see an advertisement of Nike shoes on your next Facebook visit. A much more observable example would be, people who are in your WhatsApp list but not on your Facebook friends' list, appear in "friend suggestion" panel on your home page, quite often.
    Through WhatsApp, Facebook has access to your phonebook, chats, pictures/videos - in short, it has access to you and your preferences. Now why would they want to do something that would reduce their user base (like start charging people for downloads or provide advertisements) ?

    Also, WhatsApp saves cost by reducing expenses (have you ever come across an advertisement for WhatsApp in print or electronic media?). This includes, small teams, no ads etc.
    Hope this helps :)
    Don't go gently into that good night.
    Rage, rage against the dying of the light.
  • Interesting question. The short answer to this is, no, right now, they don't make any money, at least from India where it is completely free. As mentioned above, there is a speculation that Whatsapp may use user messages to gauge their preferences.
    But these are just speculations. We have given Whatsapp the right to use our identifiable informations, such as contact list, which they use in giving Friend suggestions in Facebook and other things.

    Has anyone experienced any specific ads after discussing similar things on Whatsapp? I am not sure. Would love to try out.
    As per a blog
    This data management scheme is merely a speculation. As evident, Whatsapp is not involved in ad marketing. Any user can vouch for the fact that it does not support advertisements. Whatsapp’s CEO Jan Koum clearly states that Whatsapp is meant for instant messaging and forcing advertisements would disrupt the sole meaning of that. There is no way to justify the data management ideology, but then there is no other justified revenue model as well in the store.

    In short, indeed having access to such a huge data will be the source of futue revenue stream. How, no one is sure.

    Even Twitter had 0 revenues till 2010, when they started having sponsored tweets and trends. So, it is not odd for such companies to work on 0 revenue, kill all the competition and then unleash their powers.
    IRTS (2015), ITS (2014).
  • All generalizations are false including this one
    Fascinating Universe -
  • abhinitb said:
    Good one. Thanks. So Whatsapp doesn't sell data as of now. And it doesn't seem that they are using our messages to read and profile us. So the only way is as mentioned in the article.
    IRTS (2015), ITS (2014).
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