WHATSAPP ACQUISITION FACES ROADBLOCK

March 13, 2014

Kate Kotler, writer

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It didn’t take privacy advocates very long to throw up a red flag in an attempt to block Facebook’s acquisition of WhatsApp: Reports from the BBC and ThreatPost state that two non-profit foundations (the Electronic Privacy Information Center and Center for Digital Democracy) have filed injunctions with federal regulators which could pose a substantial roadblock in the acquisition process if Facebook doesn’t make the reason for the startup company’s acquisition transparent. The complaint reads: “WhatsApp built a user-base based on its commitment not to collect user data for advertising revenue.  Users provided detailed personal information to the company including private text to close friends. Facebook routinely makes use of user information for advertising purposes and has made clear that it intends to incorporate the data of WhatsApp users into the user profiling business model.“The proposed acquisition will therefore violate WhatsApp users’ understanding of their exposure to online advertising and constitutes an unfair and deceptive trade practice, subject to investigation by the Federal Trade Commission.”

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This is a fair point: WhatsApp was built on a strong precept of “no advertising allowed” by its’ founder Jan Koum (as detailed by Forbes writer Parmy Olsen in her detailed profile piece of Koum and WhatsApp published last month). Whereas, Facebook has faced considerable criticism over the years for questionable advertising and data mining practices; including, but not limited to, the implementation of user photos into advertising without permission, supplementing user profiles with third party data and selling private user data to outside companies. So, what DOES Facebook intend to do with WhatsApp, if not plunder it for all it’s rich, sweet, unspoiled user info?Mark Zuckerberg is adamant that WhatsApp privacy promises to users will be honored. In a statement released to Reuters, Facebook drives this point home: “As we have said repeatedly, WhatsApp will operate as a separate company and will honour its commitments to privacy and security.” What most likely is of interest to Zuckerberg and Facebook is the backend technology which powers WhatsApp. As pointed out in another Forbes article late last week, to simply be mining the data from WhatsApp makes it -essentially- a very very expensive list of names. What tech insiders suspect Facebook is likely to do with WhatsApp boils down to splitting the business model in two into the “value creation” (WhatsApp as it stands alone, operating as it has) and the “value capture” (where Facebook takes the tech WhatsApp has created and implements it into Facebook to provide existing users with a richer, more engaging user experience).

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In addition, Facebook – of all places – may have a thing or two to learn from WhatsApp about virility: As the Zuck himself stated, WhatsApp reached 450m users faster than any other web service in existence. That includes Facebook and Twitter. According to the Economist, 72% of WhatsApp users are active on the service every single day. That number is staggering. Ease of use and the company’s commitment to user privacy has created the perfect storm to push WhatsApp ahead of its’ major competitors Skype, Viber and WeChat. Innovation is not something which is lost on Zuckerberg and crew, so it is entirely possible that they are interested in acquiring the smarts behind the app, too. But, realistically (and, sadly), as with any multi-billion dollar enterprise, The Guardian’s Dan Gillmor probably is closest to hitting the nail on the head when he says that Zuck is no “benevolent overlord” and Facebook is “trying to take over the world” with this latest big deal. Cue the theme music from Pinky & the Brain… we know Zuck is the Brain, so who is Pinky in this scenario?!Kate Kotler, writer