Facebook is probably the biggest online data warehouse of individuals on the entire planet, and its entire business model is about monetizing that data in new and unique ways (often through ads). But that won’t be happening with WhatsApp, and not just because WhatsApp’s founders hate advertising.
It’s because Facebook and WhatsApp have next to no basic data on their users, Facebook’s CFO confessed last night on a conference call with investors to explain the $US19 billion acquisition.
Two analysts asked what user data Facebook would get in the acquisition. WhatsApp has 450 million users, compared to Facebook’s 1.2 billion. Analysts wanted to know how big the overlap is between the two companies, and what kind of demographic data might now be added to Facebook’s database.
They were disappointed. New users signing in for WhatsApp need provide nothing more than their phone number. You can sign in with your Facebook account, but you do not have to. Here is what Facebook CFO David Ebersman said when he was asked about the user data:
WhatsApp has good penetration across all demographics but you are not asked your age when you sign up.
Ebersman was then asked about the paid v. non-paid userbase, and the geographic location of users. He said:
We don’t have those details to share … data hasn’t been a top priority and won’t be. … we don’t have data to share on the geographic breakdown.
That is pretty unusual in techland. Normally, the inherent value of a tech company is wrapped up in its user base, and what the company knows about who its users are and how the use the service. That appears to be missing in this deal.
It won’t be missing for long, of course — this data is easily collected or reverse-engineered. But it is interesting that it was not, apparently, a deterrent to the deal. Indeed, Facebook CEO Mark Zuckerberg admitted recently he’d had a change of heart on the value of “real identity” — the core data proposition at the heart of Facebook.
This acquisition thus suggests that as users value their privacy and anonymity, companies can make their way without strip-mining their user data for revenues.