The boring conspiracy behind Facebook's big plan for messaging unification
This week the New York Times scooped Facebook plans to unify the infrastructure behind Facebook Messenger, Instagram, and Whatsapp's messaging services. Journalists and the internet at large have come up with lots of possible reasons, from more targeted advertising in the midst of revenue concerns, to hampering potential antitrust efforts.
I think the real driver behind the move has to do with revenue, but not in the way people think. And while it might not be a satisfying conspiracy if you're thinking about #Facebook, it should be very intriguing for those thinking about $FB.
When people think about Facebook's business model, they think advertising, and rightly so. Facebook is part of the much-vaunted duopoly, and almost all of their revenue comes from advertising.
But Facebook has always been aggressively looking for additional sources of revenue. Sometimes too aggressively. Like when they were knowingly and intentionally tricking kids into spending their parents' money on games.
Zuckerberg may also be planning based on the assumption that user-contextual real-time bidding as we know it isn't long for this world. He's certainly been to enough government hearings that planted that seed. And with GDPR enforcement beginning in earnest, combined with the open secret that the current minimal effects of GDPR on programmatic spend are simply because of flawed or even fraudulent consent strings, it's enough to get an ad-dependent CEO to think creatively.
User-contextual targeting is all Facebook has because they never figured out how to make search work. So while Facebook has always been trying to find another source of revenue, Zuckerberg knows they need one now more than ever.
Facebook's move to unify the infrastructure behind Facebook Messenger, Instagram, and Whatsapp's messaging features is in preparation to create a unified customer service suite for businesses.
Yup. Not as sexy as ad targeting or as scandalous as antitrust. But whether you're client-side, tech-side, or investor-side this could have serious fiscal implications for you. Because it would be a premium product. And of course, over time, all existing business-side messaging UIs and APIs (read: all free options) would first no longer get any new features, then eventually just be deprecated entirely.
A moment's inspection shows it's a perfect way to diversify revenue beyond advertising. It still uses Facebook, Inc.'s core strength (the ability to reach almost everybody) and it only requires up selling (extorting?) existing business customers instead of getting billions of users to enter credit card data.
There would, of course, be a freemium version for very small businesses with a message volume limit and none of the extras like order tracking, customer history, or reservations. This this would serve a dual purpose for Facebook. First, it would help them avoid blowback for charging the Ma's and Pa's of the world for serving their customers. Second--and critically--it would ensure high enough penetration that users of Facebook, Inc. properties would have an expectation of participation from businesses, forcing most companies to pay up.
This might sound a little out there. After all I'm basically proposing that Facebook is going to get into an entirely new vertical. But did you know this already exists within the Facebook, Inc. portfolio?
Enter WhatsApp Business. It's basically what we just read. Customer service messaging for businesses, but with an enhanced feature set (a suite , perhaps?). Though it's being actively developed, it's also been weakly monetized.
That makes sense. After all, even with its large user base, no single messaging service can really have the leverage to make the first, "pay up" demand. But if three of the largest (with what we'll call a functionally 100% penetration) make that demand at the same time, with the added bonus of one UI to rule them all, well that's a lot of leverage.
But first they'd need unified infrastructure.