Saturday, 4 October 2014

Why Google Is Following Facebook’s WhatsApp Gambit

whatsapp-inline
WhatsApp. Josh Valcarcel/WIRED
The rise of the dead-simple, dirt-cheap, emerging-market-friendly mobile messaging app continues.
On Friday, as the European Union rubber-stamped Facebook’s $19 billion acquisition of mobile messaging startup WhatsApp, The Economic Times of India reported that Google is building its own WhatsApp competitor, with plans to test the app in India and other emerging markets. Google declined to comment on the report, but such a move is to be expected.
Tools such as WhatsApp—which let you trade text messages and photos with friends and family via mobile phones—are widely used in places like Spain, The Netherlands, Japan, and Korea, says Pamela Clark-Dickson, an analyst with the London-based research outfit Ovum, who closely follows the rise of these messaging apps. But they’re also extremely popular in emerging markets such as India and China, in large part because they provide a cheaper alternative to the SMS text messaging systems provided by local cellphone wireless services, Clark-Dockson explains.
Since so many people in these markets are reaching the internet for the first time on phones—not PCs—these simple, ad-free apps have become de facto social networks, used in lieu of things like Facebook. WhatsApp now claims over 600 million users worldwide, with about 833,000 new users signing up each day.
As these primary internet services saturate the U.S. and Europe, tech giants such as Facebook and Google see so much of their future growth in these markets. That’s why Facebook paid an enormous $19 billion for WhatsApp, and apparently, it beat Google to the punch. Some reports indicated that the search giant bid for WhatsApp as well.
Facebook is already exploring ways of advertising on cheap phones attached to low-bandwidth networks in places like India and Africa, and Google just launched a new effort effort to get its Android operating system onto low-cost phones in such areas. Simple messaging apps—the social networks of emerging markets—are a natural extension of these efforts. Yes, WhatsApp is ad-free, and the company has vowed to remain ad-free. But Facebook has shown that, in the long run, revenue can be drawn from such services, either through a new breed of low-bandwidth ad or by using data about users to target ads in other places.
For Google, the problem is that it’s behind the curve. It has offered other messaging apps, but nothing that has competed with the likes of WhatsApp. “Google has already tried a number of things when it comes to messaging,” says Clark-Dickson. “[A WhatsApp competitor] could work for them. But at the moment, their messaging strategy is, shall we say, disjointed.”
Alongside WhatsApp, several similar apps have achieved similar success in the developing world, including WeChat, Line, and Viber. None is as popular as Facebook’s WhatsApp. But all continue to spread.