But its retractions and clarifications, namely that Europe will be exempt, have caused further problems in its all-important high-growth international markets. The Indian government, for instance, is understandably annoyed that some territories are exempt from the changes, but others must comply. Perhaps ‘exodus’ is a little strong, but we can agree that the story has run out of Facebook’s control.
It is true that fears got ahead of facts, especially around sharing message content, which WhatsApp itself can’t access, let alone Facebook. But behind every widespread rumour there’s the kernel of a deeper truth.
Ultimately, the changes to WhatsApp are all about smoothing the passage of information – especially payments and transactions data – to the Facebook mothership. Less nefarious than the rumours held, it is still in the service of the company’s real money maker, its advertising and, increasingly, its e-commerce interests – which Facebook expects to become important to the popular messaging app in the medium term.
Little of this is new or surprising to advertising professionals. This is just part of the way things are done around here. But the reaction to Facebook’s changes, the way fear, supposition, and not totally unfounded mistrust in the company caught fire should give the whole industry pause. People care about this stuff, and even if they don’t necessarily go about their lives making sure their devices and browsers are free of tracking, the invocation of the F-bomb got people spooked.
WhatsApp’s integration reveals the weird toxicity of the Facebook brand. Facebook is a bit like advertising, which, in my experience, people simultaneously believe to be far more powerful than it actually is and that they are singularly impervious to its effects.
What’s going on here?
Lots of aspects are appended to the word brand – love, ladders, loyalty – but then there’s trust. Brand trust is, at once, a bit of an exaggeration and the very essence, the point of a brand. The NYU professor Scott Galloway calls it an “irrational margin,” while Warren Buffett termed brand – an intangible asset – one of the competitive advantages he looks for in a business to act as an “economic moat”.
The interesting thing about Facebook is that it didn’t grow using its brand. Indeed, it, along with Google and Amazon, were the poster boys of the growth-at-all-costs era, in which the promise of future dominance in a chosen arena kept capital cheap with VCs and investors hungry for a cornered market. And, so far, it’s worked brilliantly, mostly because the media market they dominated was so ripe for disruption.
Messaging, however, is a different story. Unlike Instagram, estimated to now be worth 100x the meagre $1 billion Facebook paid for it in 2012, WhatsApp has dominion but hasn’t yet delivered value. Monetising a product that people see as necessary, intimate and free, is going to be tough without a protective moat. And, worse still, it is trying to elide the good name of one brand with the increasingly distrusted other.
For now, as ever, it’s unlikely to affect Facebook’s generally irrepressible financial performance, slowed only slightly by the pandemic. On top of this, given that WhatsApp makes the company little money, a few million downloads of a different app is a drop in the ocean for the company. And remember that rival downloads don’t necessarily equate to WhatsApp deletions.
A year ago, CEO Mark Zuckerberg told investors that his goal wasn’t to be liked but to be understood. As Casey Newton, formerly Silicon Valley editor at the Verge put it, the problem isn’t that people don’t understand what Facebook stands for, the problem is that they do. But then, you don’t need to trust every product you use, especially when there’s no realistic competitor to Facebook – on a technical level there might be, but no one has quite cracked organising birthday parties like it has. Similarly, lots of people don’t trust that Uber is a good company, but they trust the product to get them from A to B.
The task now will be to find a way to control the story in a way that allows Facebook to maintain the trust WhatsApp commands among users, and to combine it with the usefulness that the Facebook platform offers to businesses. Having grown as large as it has, it will now need to put in some hard yards in order to build a buffer.