The chief executive and co-founder of WhatsApp, Jan Koum, the Facebook-owned messaging app, is leaving the company over disagreements about privacy and encryption. According to a report in the Washington Post, Koum’s decision is based on Facebook’s attempts to access personal data of users from the popular messaging service and weaken its encryption. Koum will also step down from Facebook’s board of directors, a role he negotiated when WhatsApp was acquired by the social media giant for $19 billion in 2014.
“It’s been almost a decade since Brian [Acton] and I started WhatsApp, and it’s been an amazing journey with some of the best people. But it is time for me to move on,” wrote Koum in a Facebook post. Koum’s exit adds to a long list of red flags on Facebook’s handling of user data that have raised in the last few months starting with the Cambridge Analytica scandal. The other co-founder of WhatsApp Brian Acton had left Facebook in November and had endorsed the #DeleteFacebook social media campaign following news that Cambridge Analytica had improperly accessed data from 87 million Facebook users.
Founders clashed with Facebook on UPI
WaPo’s report notes that the founders “clashed with Facebook over building a mobile payments system on WhatsApp in India.” WhatsApp’s payments system in India is powered by the Unified Payments Interface (UPI). We speculate that concerns of the WhatsApp founders may have stemmed from the fact that while all messaging on WhatsApp is end-to-end encrypted the payments service is not, by design. This means while third parties and government agencies cannot peer into chats between two individuals they will be able to have access to data regarding all payments made via WhatsApp.
WhatsApp has over 200 million monthly active users (MAUs) in India. Globally the platform has 1.5 billion MAUs, making it the largest messaging service in the world.
WhatsApp hated ads, Facebook hated encryption
When WhatsApp launched in 2009, it promised to offer private communications for 99 cents a year. By 2014 the messaging service had close to 500 million users as Facebook bought the company for an eye-watering $19 billion. As the WaPo reports, even back then there were signs of a mismatch, the company valued at $19 billion was making less than $20 million in revenues.
Koum and Acton were openly disparaging of Facebook’s ad-driven model, in 2012 they wrote in a blog post that, “no one wakes up excited to see more advertising; no one goes to sleep thinking about the ads they’ll see tomorrow.” And added that online advertising is “a disruption to aesthetics, an insult to your intelligence, and the interruption of your train of thought.”
Understandably this difference in ideologies led to conflicts over how WhatsApp would be monetised. Facebook scrapped the 99 cents, annual charge, and Koum and Acton continued to oppose the advertising model. In January, Facebook launched a tool, called WhatsApp Business, to allow businesses to create a profile and send messages to their customers on WhatsApp. This has to potential to become a trojan for advertising as WhatsApp Business will be a paid service for all but the smallest of companies, and one would imagine they will try to leverage access to consumers by advertising through WhatsApp messages.
WhatsApp’s encryption was another major bone of contention between the company and Facebook. In 2016, WhatsApp added end-to-end encryption, which makes conversation between users inaccessible to anyone except the sender and recipient, even WhatsApp and Facebook cannot access these conversations. According to WaPo’s report, Facebook executives wanted to make it easier for businesses to use its tools, and WhatsApp executives believed that doing so would require some weakening of its encryption.