This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
New York Times reports that Facebook Inc. (NASDAQ:FB) is looking to integrate the chat tools that WhatsApp, Instagram, and Facebook Messenger use.
Merging Chat Tools
The proposition from the company would entail using the same tools and protocols across the messaging aspects of their platforms. The benefits to this from Facebook’s side are obvious:
- The first being a consistent experience for their advertisers across platforms. Facebook and Instagram rely heavily on advertising on their platforms, and indicators show that WhatsApp will be implementing some form of ads in the near future. This consolidation would give all their advertisers similar metrics and tools to use when deploying across the different platforms simplifying the process.
- The second benefit would be that managing three platforms using similar technology would be easier to manage from an overhead perspective, a theoretically smaller workforce could be utilized, and cost efficiencies could be realized over time.
- The third benefit for Facebook and arguably the most valuable would be the data sharing between the platforms that could better target users for advertisements. If they could start cross-referencing or even consolidating platforms accuracy for advertisements will increase and therefore they could increase costs.
How Could it Affect Users?
The consolidation likely would not be appreciated by the users though, the main benefits that users could see would are two hypothetical conveniences; the first would be using one login for all three platforms, and the second would be interoperability across the platforms. The conveniences would come at the cost of losing more privacy from the users, which has been highly contested lately.
Facebook executive Cheryl Sandberg recently noted to Die Zeit (via Reuters) that Facebook needed “to earn back trust” of their users, citing that they are spending billions of dollars to increase their security. The New York Times reported that all three platforms will have end to end encryption in a bid to increase customers privacy. Politicians have been calling for Facebook to be split up, but if they can justify further why having all 3 platforms together is valuable to their customers, regulators would have a more difficult time trying to split the company up.
As of writing the stock is up 4% on the news, however, their annual earnings report will be published next week and will be a bigger indicator of actual company performance. It’s a very complex tradeoff for users with the promise of increased privacy through encryption, but possibly having to give Facebook more information about users who now could become increasingly dependent on the platform.