How Facebook Plans to Turn WhatsApp Into a Moneymaking Business

On the final day of November, Facebook Inc. announced it had bought a customer service software startup most people had never heard of, in a deal valuing the company at more than $1 billion. Although it was the third-largest acquisition in Facebook’s history, slightly more than it paid for Instagram in 2012, the deal drew very little notice. In Washington, where regulators are actively pursuing antitrust lawsuits against Facebook and politicians condemn almost every move the company makes, the purchase of Kustomer Inc. was met with crickets.

But if the deal’s significance isn’t clear now, it could be soon. Acquiring Kustomer is the latest in a series of expensive bets related to Facebook’s $19 billion purchase of WhatsApp in 2014. Earlier this year it invested in Jio Platforms, an Indian internet giant that WhatsApp plans to partner with on commerce. While not an acquisition, the $5.7 billion Jio investment was Facebook’s second-largest financial deal ever. Taken together, the moves add up to an investment in private messaging of about $26 billion.

Facebook has been under the microscope for its impact on U.S. politics and its outsize role in the economy. It’s also expected to face a federal antitrust lawsuit any day now. Officials have been focused on its habit of acquiring smaller companies to head off competitive threats, and some investigations have touched on the deal with WhatsApp—the world’s largest messaging service, with more than 2 billion monthly users. While the app makes relatively little money now, Facebook sees private messaging as the foundation for its next big business, presenting it with one of its biggest challenges even if a federal lawsuit doesn’t complicate matters.

WhatsApp doesn’t loom especially large in Facebook’s home market, but it’s huge almost everywhere else—especially in India, where it says it has more than 400 million unique users a month. Chief Executive Officer Mark Zuckerberg sees potential to transform that user base into a profit center by enticing retailers to sell goods and services inside WhatsApp, or use the app to handle customer service issues that might otherwise require an email or phone call.

For Facebook, a company that makes 99% of its revenue from advertising, WhatsApp presents a chance to diversify its business and protect itself from erosion in enthusiasm for its core social networking apps. Eventually, Facebook believes, it can control the entire exchange between a brand and its customer, starting with an ad on Facebook or Instagram and leading to an interaction or product sale on WhatsApp or Messenger. “Instagram and Facebook are the storefront,” says WhatsApp Chief Operating Officer Matt Idema. “WhatsApp is the cash register.”

Subscribe to our YouTube channel

Bloomberg Quicktake brings you live global news and original shows spanning business, technology, politics and culture. Make sense of the stories changing your business and your world.

To watch complete coverage on Bloomberg Quicktake 24/7, visit or watch on Apple TV, Roku, Samsung Smart TV, Fire TV and Android TV on the Bloomberg app.

Have a story to tell? Fill out this survey for a chance to have it featured on Bloomberg Quicktake

Connect with us on…

Breaking News on YouTube