I marvel at how Facebook zigs where others zag.
WhatsApp, the messaging company Facebook bought a couple years ago for $19 billion, said Monday it’ll no longer charge a $1 annual subscription fee for some users after their first year. The amount seems trivial, until you consider that WhatsApp, according to a company blog post, has nearly 1 billion users.
The bit about zigging versus zagging is that the Facebook unit is abandoning subscriptions just as the rest of the world is going gaga for them. Netflix, HBO, The Economist and others are widely admired because customers pay top dollar to be entertained and informed by them on an ongoing basis. No trashy content or trashier advertisements for entities like this. (HBO and Netflix sell no ads.) Or consider high-quality podcasts like Serial, which sell high-priced (and classy) ads to reach subscribers who don’t pay anything at all.
Then there’s WhatsApp, which said collecting a buck from such a big pool of users, many of whom don’t have debit or credit cards, was getting too difficult. The company’s response won’t be advertising, by the way. Moving to the revenue model that has made its parent, Facebook, worth $268 billion would be too logical. Instead, WhatsApp is exploring ways to charge businesses to message their customers.
As an aside, I picked up a fresh piece of lingo from a Wall Street Journal dispatch on the WhatsApp move. It quoted WhatsApp co-founder Jan Koum, speaking at the DLD European technology conference in Munich, making reference to the “so-called commercial-participation model.” This is significant as it’s an evolution of the ultra-successful “freemium” model that only charges certain customers, typically those willing to pay for premium features or more volume. “Commercial-participation” suggests soaking companies to subsidize consumers, an echo of Google making its outstanding search results free but charging for search-driven ads next to them. Smart.
Facebook’s willingness to experiment and to take the product-development high road reminds me of another Google move, its years-ago refusal to slap schlocky ads on early YouTube videos. Few companies can resist easy revenue in search of bigger businesses. The best ones can.
BITS AND BYTES
Deadline looms for new ‘safe harbor’ pact. Negotiators have until Jan. 31 to deliver a revised policy for how European citizens’ data is shared across the Atlantic. Generally speaking, European nations advocate stricter privacy safeguards than the United States. The rhetoric is escalating, with businesses warning of “enormous” consequences for the future of digital commerce. (Reuters)
Meanwhile, Europe’s antitrust chief promises closer scrutiny. Margrethe Vestager, the European Commissioner for Competition, has long been critical of how much personal data big companies like Google and Facebook collect to inform their advertising services. For her, it’s not just a privacy thing. In a speech Sunday at a digital business policy conference,Vestager warned (again) about the negative implications for competition. (Wall Street Journal, New York Times)
Google and Facebook want Supreme Court to consider Apple-Samsung dispute. They’re among the companies and legal experts protesting how damages were calculated in the longstanding design patent dispute. The latest lower-court ruling basically requires Samsung to fork over most of the profits from its infringing smartphones, under a law written decades ago. (Fortune)
Alphabet reorganizes robotics group. After two years without a clear leader, the company’s robot-related research and development activities are being moved into Google X. A former Nokia executive, Hans Peter Brondmo, will help with management. The technology will be vital for everything from drones to self-driving cars. Not everyone is excited. In a new report timed for the Davos meeting, the World Economic Forum worries robots will contribute to the loss of 5.1 million jobs over the next five years. (New York Times, Reuters)
Hope for tech stock respite? Tech stocks were hammered last week in a global selloff, after Intel shared its low financial expectations for 2016. Virtually no company was spared, including business software company Atlassian, which pulled off a highly successful IPO in early December. All eyes are on Twitter, which closed at less than $18 last Friday. Its stock has lost 40% of its value in the past three months. (TechCrunch, Wall Street Journal)
Investors take big bite out of Jawbone’s valuation. The wearable technology company raised $165 million in a round that values it around $1.5 billion. That’s about half of what it was worth after its last publicly disclosed infusion in 2014. Foursquare suffered a similar fate last week. (New York Times)
Rite Aid brags about marketing ‘beacons.’ The drug store chain has installed location-smart, in-store sensors for beaming personal mobile messages to shoppers at more than 4,500 locations. That’s even more than retailer Macy’s, which once ran the biggest beacon technology installation in the United States. (ZDNet)
Microsoft buys education software company. The software giant has acquired MinecraftEdu, a version of the popular Minecraft game that is used in classrooms to help teach anatomy and other scientific concepts. The move makes sense given Microsoft’s $2 billion buyout of Minecraft almost two years ago, as well as recent forays into education software by both Google and Apple. (New York Times)
Qualcomm forms joint venture in China to take on Intel. Mobile chip giant Qualcomm is getting into data centers with a new joint venture to design and sell server chips in China. The initiative brings together Qualcomm and the government of China’s Guizhou province. A Qualcomm subsidiary will own 45% of the newly formed company and the Guizhou government owns 55% for a total value of RMB 1.85 billion, or about $280 million. More about the deal. (Fortune)
IN CASE YOU MISSED IT
Twitter hit by global outage by Geoffrey Smith
Privacy laws pose new threat to free speech by Jeff John Roberts
GE finds big companies seek ‘safe innovation’ by Stacey Higginbotham
Amazon will soon let the Echo control your connected thermostats
by Stacey Higginbotham
Apple to kill free iTunes radio by Verne Kopytoff
These new wearables aren’t for your wrist by John Kell
Porsche thinks it can do electric cars better than Tesla by Sue Callaway
ONE MORE THING
Who can dance better, Bill Gates or Steven Jobs? “Nerds, A Musical DotComedy” starring characters based on the two longtime rivals is set for its Broadway opening in April. (Fortune)
This edition of Data Sheet was curated by Heather Clancy: