How WhatsApp Makes Money

In an era when instant messaging is a main form of communication, WhatsApp stands out as a global titan with over 2.5 billion monthly active users. The Meta Platforms, Inc. (META)-owned platform, which began as a simple alternative to SMS—one co-founder said it was created so he wouldn’t miss any more calls while at the gym—has evolved into a major communication tool. But in a world where “free” often comes with hidden costs, many wonder: How does WhatsApp actually make money?

The question has been asked by users and investors alike. Unlike many of its competitors, the app doesn’t bombard users with advertisements or charge for basic features. This ad-free approach has been vital in its meteoric rise to become one of the world’s most popular messaging platforms.

However, onlookers think, surely, behind this user-friendly surface lies a sophisticated strategy for making money on it. After all, in recent years, Meta CEO Mark Zuckerberg has said the app is central to its long-term plans, even as the app doesn’t easily cohere with Meta’s early 2020s pivot to virtual spaces or its mid-2020s move to AI.

Below, we’ll review WhatsApp’s revenue streams and explore how this messaging giant turns billions of conversations into a profitable venture. From its business application programming interface (API) to its role in Facebook’s data-driven advertising machine, WhatsApp’s monetization approach offers valuable insights into how digital communication and e-commerce continue to evolve.

Key Takeaways

• WhatsApp is a mobile app that allows users to message and call each other over the Internet.
• WhatsApp was founded in 2009 and bought by Meta, formerly Facebook, in 2014 for $19 billion.
• Meta’s third-biggest property is now WhatsApp, after Instagram and Facebook Messenger.
• Meta eventually removed the $1 fee and made WhatsApp a free service, with the idea that consumers would communicate with businesses through it.
• Revenue in 2023 for WhatsApp was $1.3 billion.

How Does WhatsApp Make Money?

The short answer used to be $1 at a time. In some countries, the app used to cost about $1 to download; in others, the first year is free, but each subsequent year costs $1. At the peak of using this model, WhatsApp had about 700 million users worldwide. In 2016, WhatsApp announced that the era of subscriptions had ended, and the messaging app would now be free to use. 

Without ads in place since then, it’s difficult to see why Meta is publicly so bullish on its future. Though WhatsApp’s financial statements aren’t public (Meta doesn’t break down its revenue by company), plausible estimates put annual revenues at about $1.3 billion as of late 2024.

That’s less than 1% of Meta’s yearly revenues. In the past decade, WhatsApp has barely made much in the way of gains to offset its 2014 purchase price. Nevertheless, Meta is pinning many of its hopes on the platform.

While free for individuals, it has developed several key revenue streams:

Business API and Paid Messaging

WhatsApp’s primary revenue stream is its business API. This tool allows medium and large businesses to communicate with customers at scale. Companies pay to send messages to customers (e.g., a store updating you on your purchase or an airline sending you a boarding pass), with fees based on the country and message volume. Over the years, Meta has been trying to migrate consumers to WhatsApp from its other platforms, such as Instagram and Facebook. But that’s largely been unsuccessful.

Important

WhatsApp Business is where most of WhatsApp’s revenues are derived, according to Meta.

Still, from 2022 to 2024, the service’s revenues have grown significantly year-over-year as businesses commercialize the app for their needs. Alice Newton-Rex, WhatsApp’s vice president of product, told the Financial Times in late September 2024, that “paid messaging is a bit earlier in the journey, but it’s also doing well, and we’ve passed a $1 billion run rate.” The latter is a projected metric for a year. For example, if a business earned $250 million in a quarter, its run rate would be $1 billion annually.

A big driver behind this shift hasn’t been some mass of users coming over from Meta’s other platforms—though Meta has certainly tried to spark such a move—but organic growth of WhatsApp users looking for free ways to communicate outside of clunky SMS messaging that are often operating-system-specific.

Click-to-WhatsApp Ads

The ad format, which allows users to initiate WhatsApp conversations with businesses directly from ads on Facebook and Instagram, has become Meta’s fastest-growing:

• It’s projected to potentially reach $10 billion in revenue in 2024.
• This strategy effectively monetizes WhatsApp’s growth by leveraging Meta’s existing ad platforms.

These ads, when clicked, open a WhatsApp chat with the advertising business. This feature has been popular in developing countries where businesses might not have a strong online presence. WhatsApp has introduced a new feature called Channels, which allows one-to-many broadcasts. While not yet monetized, Meta has been talking up future growth in this area.

“We definitely see an opportunity to help admins build a business around their channel, for example, by making it paid, or maybe giving them a chance to promote themselves in the directory,” Newton-Rex said.

WhatsApp Pay

Launched in select markets like India and Brazil, WhatsApp Pay allows users to send money directly through the app. While free for individuals, WhatsApp charges businesses a fee for payments received, like other digital payment processors.

Indirect Revenue Through Data

Although WhatsApp messages are end-to-end encrypted, the app still collects metadata about user behavior. This data, while not directly sold, contributes to Meta’s overall data pool, enhancing the value and targeting capabilities of its advertising platforms across its ecosystem.

Revenue Strategies and Market Expansion

Meta has been aggressively pursuing new revenue in areas where the app has previously had less penetration:

AI-Driven Business Tools

Meta is introducing AI-powered features to improve WhatsApp’s appeal to businesses:

• AI chatbots: WhatsApp is allowing businesses to use free AI chatbots for customer service, aiming to automate and streamline business-customer interactions.
• AI-driven ad targeting: The company has launched its first AI-driven ad targeting program for businesses on WhatsApp, using behavior data from Facebook and Instagram to target messages more effectively.
• AI ad creation tools: Meta plans to offer AI tools to help businesses create ads within the WhatsApp Business app, potentially increasing ad spending from smaller businesses.

Note

WhatsApp’s business API marks a shift in how messaging apps look to profit from their user base, focusing on high-value business communications rather than advertising.

Expansion in Emerging Markets

Meta is focusing on countries like Brazil and India, where WhatsApp has high user engagement but less monetization:

• Payment integration: In Brazil, WhatsApp is integrating with PIX, the country’s instant payment system, to improve its capabilities.
• Business partnerships: The company is forging business and advertising partnerships with major companies like Amazon.com Inc. (AMZN) and Uber Technologies Inc. (UBER) in Latin America and India.

U.S. Market Growth

WhatsApp has been seeing significant growth in the U.S., particularly among younger users, though this is a percentage increase from what was previously a very low engagement rate in the country. Nevertheless, Meta says its studies show that more than half of Americans ages 18 to 35 who own a smartphone have installed WhatsApp.

The “Private Social Platform of the Future”

Mark Zuckerberg said in a 2024 earnings call that he envisions WhatsApp as the foundation for the “private social platform of the future.” While a seeming oxymoron that raises more questions than it answers, Zuckerberg’s formulation suggests a shift in Meta’s focus from public social networks to more intimate, messaging-based interactions.

Meta’s strategy clearly aims to monetize WhatsApp’s growing user base, particularly in markets where it has previously had less financial success. By introducing business-focused AI tools and leveraging cross-platform synergies, Meta is positioning WhatsApp as a central part of its future revenue growth, especially as traditional Facebook usage has been declining in some markets.

WhatsApp’s approach to monetization focuses on business services rather than individual users, allowing it to maintain ad-free personal messaging while still generating significant revenue. This strategy aligns with the broader trend in tech of monetizing business-to-consumer communication channels while preserving user privacy.

Challenges and Risks of Monetizing WhatsApp

While Meta has been aggressively pursuing new revenue streams through WhatsApp, this strategy faces many challenges:

• Balancing user experience and monetization: WhatsApp’s popularity stems partly from its ad-free, privacy-focused nature. As Meta introduces more business features and AI-driven tools, it risks alienating users who prefer a simple, uncluttered messaging experience. The challenge lies in monetizing the platform without compromising the core user experience that made WhatsApp successful in the first place.
• Privacy concerns: WhatsApp’s end-to-end encryption is a key selling point. However, introducing AI-driven ad targeting, which uses data from Facebook and Instagram, has raised privacy concerns among users.
• Regulatory scrutiny: As WhatsApp becomes more integral to Meta’s business model, it may face increased regulatory scrutiny, particularly in areas like data privacy and antitrust law. The company’s plans to integrate WhatsApp more closely with its other platforms could attract even more attention from regulators concerned about Meta’s market dominance.
• Competition from traditional texting and other apps: In markets like the U.S., where WhatsApp is growing but not dominant, the app faces competition from conventional texting services and other messaging apps. Meta needs to differentiate WhatsApp’s offerings to continue its growth trajectory.
• Cannibalization of existing revenue streams: As brands shift more of their customer interactions to WhatsApp, there’s a risk they might reduce spending on traditional Facebook and Instagram ads.
• Cultural and market differences: WhatsApp’s usage and perception vary significantly across different markets. What works in Brazil or India may be less effective in the U.S. or Europe.
• Maintaining WhatsApp’s distinct identity: As Meta integrates WhatsApp more closely with its other platforms for monetization purposes, there’s a risk of diluting WhatsApp’s particular identity.
• Scaling AI effectively: Introducing AI chatbots and other AI-driven tools presents technical challenges. Ensuring these tools work effectively across different languages, cultures, and business types will be crucial for widespread adoption and user satisfaction.

Is It Really About the Money Though?

Industry insiders have speculated that part of the rationale behind acquiring WhatsApp was for Meta to access users’ behavioral data and personal information.

With location-sharing data, 100 billion messages sent daily, and access to users’ entire contact lists, Meta has access to a ton of personal information—all uploaded and saved on its servers.

While Mark Zuckerberg had previously promised that this data wouldn’t be used to improve consumer targeting in Meta ads, more recently, it’s been saying that Meta’s been commercializing its users’ metadata.

Is WhatsApp Really Secure and Private?

WhatsApp is generally believed to be secure and private. The platform uses end-to-end encryption, which makes sure your messages are encrypted from the moment they leave your device until they reach the recipient. There are other security features, such as security code verifications. Despite WhatsApp’s overall strong security, Meta does collect certain data from its users.

Which Social Media Platform Has the Most Revenue Per User?

Facebook is the highest social media platform with the most revenue per user, at an average revenue per user of $26.63 in 2023. Instagram is second at $23.58.

How Does Meta Platforms Make Money?

The parent company of WhatsApp makes 99% of its revenues from advertising. Meta had a net income of $39 billion and revenue of $134.9 billion in 2023. Because of its massive user base and social media reach, advertisers consider Meta to be a prime platform for advertising.

The Bottom Line

Meta says that WhatsApp, whose revenues have been comparatively meager since the company acquired it, stands at the forefront of its evolving business strategy. This is a massive bet on Meta’s behalf—one as substantial but far less talked about than its pivots to the metaverse and AI. As Facebook’s user growth slows in mature markets, WhatsApp’s expanding global user base offers Meta a new frontier for revenue growth.

The company’s multipronged approach—introducing AI-driven business tools, leveraging cross-platform synergies with Click-to-WhatsApp ads, and focusing on emerging markets—looks to transform WhatsApp from a simple messaging app into a comprehensive business communication and e-commerce platform.

This strategy could unlock billions in new revenue streams, particularly in markets where WhatsApp’s penetration far exceeds that of Facebook or Instagram. However, Meta must delicately balance monetization efforts with preserving the user experience and privacy that made WhatsApp popular in the first place.