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Jan Koum to leave after broad clashes with Facebook (washingtonpost.com)
501 points by coloneltcb on April 30, 2018 | hide | past | favorite | 291 comments

He's actually already left as per his Facebook post: https://www.facebook.com/jan.koum/posts/10156227307390011

The first comment I see is:

> Mark Zuckerberg

> Jan: I will miss working so closely with you. I'm grateful for everything you've done to help connect the world, and for everything you've taught me, including about encryption and its ability to take power from centralized systems and put it back in people's hands. Those values will always be at the heart of WhatsApp.

Given what's discussed below about the business wanting to introduce features for Enterprise that would weaken encryption it's interesting to see this. Although Zuck only talks about encryption, not e2e encryption. It also strikes me as if he's talking as much to people viewing it as to Jan, and Jan didn't reply, whereas he has with other comments.

It's because it's corporate billshit coming from master sociopath Mark Zuckerberg.

> Koum and Acton were openly disparaging of the targeted advertising model. In a WhatsApp blog post in 2012, they wrote that “no one wakes up excited to see more advertising; no one goes to sleep thinking about the ads they’ll see tomorrow.” They described online advertising as “a disruption to aesthetics, an insult to your intelligence, and the interruption of your train of thought.”

So very true.

Sure. But did they truly believe all those "assurances" about how they could keep the original WhatsApp values indefinitely while getting acquired for an obscene amount of money?

Exactly this. This isn’t delusion or naivety. This guy was smart enough to build an app and gather together 500 million people on it.

With $20million per year in revenue, that means it would take over 700 years for Facebook to break even.

Any idiot would know that Facebook would change things up to profit from all those users and he knew it too. He just wanted to grab the money (understandstable) but now pretend like he had no clue (not understandable)

Self-delusion maybe?

Definitely in great doses (or maybe not; see nolite's comment). And I don't think it would be far-fetched to say they were willingly blind (by greed) to future repercussions.

And now suddenly "wake up", after RSUs / stocks have vested, and cry foul: "Clashes over privacy...Values..."

To call it 'disingenuous' is putting it a bit too mildly.

Sorry if I'm too cynical on that; somehow I can't just seem to bring myself to assume good spirit in this case.

But their WhatsApp business model was not self sufficient. They were charging $1/year which is less than the operating cost of the servers and bandwidth.

> They were charging $1/year which is less than the operating cost of the servers and bandwidth

Are you sure of this? If they have a billion users, they're earning a billion dollars a year off of this. Considering that they don't need to store messages for an extended period of time, or run analytics, do they really need all that much?

Most people weren't actually paying. Apparently, the vast majority of users were granted free lifetime memberships (see comments here [1] and article here [2]). When Facebook acquired it, it only had $10 million in annual revenue [3] against 450 million users. Clearly, most users were jumping on board during times when it was made available for free.

[1] http://www.idownloadblog.com/2013/07/16/whatsapp-goes-free/

[2] http://www.iphoneincanada.ca/recommendations/whatsapp-messen...

[3] https://www.recode.net/2014/10/28/11632404/facebook-paid-19-...

Do you need more than $10M/year for 450M users? As I've said in another comment they barely stored anything server-side and it's known they have a very optimised stack

You do if you’ve been acquired for $19 billion. The founders couldn’t have been naive enough to think that Facebook and its shareholders didn’t have a need to monetize such an enormous investment. Facebook is not a charity, it’s a business.

Facebook monetizes Whatsapp by limiting its growth. You can easily think of all the “social” functionality Whatsapp could have added in competition with FB and Messenger.

Facebook paid 19 billion to buy up competition, as WhatsApp was a threat to the Facebook ecosystem.

That is what I am seeing now here in India, folks in my circle barely post anything to facebook now, all pictures, status messages are on WhatsApp now.

If FB pays $19B for every messenger competitor that gets traction, that's a huge incentive to make more of them.

There are network effects at play; so once a messenger has locked-in most users, it's extremely hard for newcomers to gain sustainable traction.

yeah but now you have to compete with WhatsApp to get that traction, so maybe a hard slog.

And if FB shut down WhatsApp, users will be looking to go elsewhere, and probably not FB Messenger.

Let’s say you figure out how to run a company with 100M customers with only five employees.

What stops me from getting together a few friends and stealing your business model?

At some point you have to add value just to keep the wolves at bay.

...So you'd try to solve the same problem with a different sticker to score quick cash?

I'd like you to read this and contemplate.


If you didn't bother reading and contemplating, here's the gist:

There is no wolf to fear. We are all finite beings with finite time and resources. You 'stealing' his hypothetical business model doesn't really accomplish anything except tie up your resources retracing his steps. You would be the fool reimplementing the pipe.

Now if you are the type of person who reduces life down to only pursuing the almighty dollar rather than trying to solve difficult extant problems... Well... Maybe that would be worth it to you. Even then though, he has already captured his audience, and he'll likely have a reputation advantage over your copy.

Anywho. Food for thought.

> Let’s say you figure out how to run a company with 100M customers with only five employees.

That's not how it works. I'm pretty sure you and I could write a Snapchat clone in a weekend. This doesn't imply we'll ever reach 100M users.

You could write a Snapchat “clone” but not with anything close to its performance. Snapchat has to be the most performant app I have ever seen.

Is this new? I tried it out a couple years back on a decent spec phone and it was the slowest app I've ever used. I'm pretty sure Snapchat the app was known for being sort of a wreck at some point. My daughter still put up with it but it was painful to watch her use it.

I have a fairly high end Android phone (OnePlus 3) and Snapchat freezes up all the time. Video pretty much always stutters without fail. IIRC it was the same on my Nexus 5 as well.

Network effects?

Red Queen effect

Tremendous network effects and extremely high retention

Hosting is pretty far down in the list of operating costs for a business. Employee salary, benefits, marketing etc. is where most of the money goes.

WhatsApp had 55 employees and I'd say it had no marketing to speak of.

55 * $100,000 is already $5.5 million. Revenue of $10M/year seems pretty tight to me, for a 55 person company.

Not to mention the video someone posted beloew from an engineer talking about Erlang there in 2014 has some interesting numbers. Christmas/New years is peak, and on Christmas Eve they were maxing out at 146GB/s out.

If we assume they maybe averages 75% of that over 6 hours, that's 146Gb/s * (60606)s / 8bytes/byte * 0.75 * 0.05dolars/GB = $14,782.50 for a 6 hour period (estimate).

That's highest listed bandwidth tier price for Azure, I'm sure they would pay less for a number of reasons. But let's just say that $10k for a whole day may not be out of the realm of possibility. That puts bandwidth costs possibly North of $3 million a year. Even at $1 million, that's a lot of money.

Ok but a serious company wouldn't pay per byte if they were trying to save money. They could buy that much connectivity for like 50k a month. (Though they'd need to get some switches and have a network engineer.)

And if that's audio/video Vs just text, clever NAT hole punching techniques could reduce it if truly needed.

But, it seems WhatsApp was on SoftLayer? In that case their costs might have been vastly higher.

Real costs per employee are 2-3x the salary anyways.

I find that hard to swallow for a small company size, such as being discussed here. Do you have a reference or some reasoning to support this? I'm interested to know where it comes from.

Benefits, office space, equipment, T&E, employment taxes, etc. This is an old article but it suggests about 2.7x. [1] I agree that it might be less for a startup assuming a frugal startup but it's probably at least 2x salary on average.

[1] http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-... (This is old but nothing really substantial has changed except.)

I'm not sure a ratio-to-salary is the best tool here. I mean, why would a developer on $150,000 have twice the healthcare cost, or office space cost, or equipment cost of one on $75,000?

It’s just a rule of thumb and some costs do roughly scale. I’m sure there are more sophisticated calculators and spreadsheets for this sort of thing.

I'm assuming you don't run a business. 2-3x sounds in the right ballpark to me.

Why is everyone making 100,000?

That is a very conservative mean all-in cost per employee for a group of professionals. Edit to add: in the US that is.

Yes. That implies the average salary is almost certainly <$50K and maybe more like $35-40K.

Because they are developers?

Developers would cost way more than that, especially if you factor in taxes.

I started paying before they were bought, I might even have paid twice and I loved it. Would happily paid for a few famuly members as well.

Also there should be a huge possibility to increase revenue by selling API access (think appointment reminders etc as well as the whole bot ecosystem).

When Telegram started they talked about price and I think I remember being unconvinced. I wanted to pay. As we (used to) say here on HN: if you're not paying you are the product.

(Of course now we have learned that some companies charge us and still sell our (meta)data and advertise to us.)

They did a great job avoiding taking too much funding though!

In 2015, when WhatsApp had ~1B active users, Facebook said that the overall revenue from it was insignificant enough they they were just making it free. I'm pretty sure it wasn't charging the vast majority of users (which is how it got popular in developing countries in the first place).

> Facebook said that the overall revenue from it was insignificant enough they they were just making it free

Have you considered that Facebook might not be telling the whole truth?

"insignificant" compared to what, how much money Facebook makes off of every extra user (who wouldn't want to pay) on their platform? Making it free can only be a profitable move because of what Facebook could do with the data, not because a few million dollars a year is truly "insignificant".

Articles I read when Facebook bought them said they were losing money. Most reports I just Googled were subscription only or plastered with ads but here's financial sheets:


According to this interview the addition of the $.99 charge was to slow down growth.

He wanted to be sure they could provide a fast, reliable service and was concerned they might get swamped by an influx of users.


According to the interview:

WhatsApp began as a "status" service. Original iPhone had no background or push notification; user had to start the app to check others' status. When Apple added push notifications to iPhone, they added this to WhatsApp allowing status to be "broadcast".

Users in Europe were paying high prices for international SMS. These users saw that broadcast status notications were similar to international SMS, but free. Some of them suggested this to WhatsApp and so WhatApp added messaging.

Then the app took off.

WhatsApp used FreeBSD, Erlang and SSDs when, according to Koum, everyone in Silicon Valley was using Linux, Apache, MySQL, Perl (LAMP) and HDDs. Compared to others in Silicon Valley, WhatsApp had far fewer servers and employees per user.

> everyone in Silicon Valley was using Linux, Apache, MySQL, Perl (LAMP) and HDDs

PHP, not Perl.

at the time of accusation, WhatsApp was running on 16 servers! Erlang is idle for communication, they had like 1 million concurrent user on each server!!!

It feels like modern web design practices have grossly skewed people’s estimates of what it costs to deliver a service. Text messages are not fundamentally hardware intensive to deliver - unless you add tracking, “machine learning”, ad delivery, and mountains of JS for serving the app itself dynamically.

Or write the service in Ruby

I adore Ruby, but I think that's fair.

Twitter's failwhale-heavy Ruby experience is a good example. Ruby and especially Rails are good examples of trading hardware for programmer convenience. This is absolutely great when you're banging out an in-house app for 100 people, and there's no problem spending $1 per user-month on hardware. But Twitter's revenue is only $0.60 per user-month, and they need to spend on things besides severs. There is a reason that they needed to switch away from Ruby to a much more complicated architecture: https://blog.twitter.com/engineering/en_us/topics/infrastruc...

I also saw some people go the other direction. They had a Java app for serving a high-volume website. But the developers had a rewrite itch, and the execs were afraid they couldn't get acquired without a more hip technology stack. They even hired a fancy consulting firm to help, but when the first version was ready to go it was incredibly slow. Like two orders of magnitude slower to render a page. The rendering times were considered normal in Rails-land, but were a real problem at volume. So they spent another 6 weeks putting in a lot of caching while the ops people ordered a bunch more hardware.

Absolutely stellar talk by principal engineer Rick Reed about scaling their Erlang setup: https://www.youtube.com/watch?v=c12cYAUTXXs.

We use erlang for managing our device messaging, I've seen the board in the office crawl up to simply obscene numbers of connected devices... on one server. Multi millions.

To be fair it's tiny little messages, I'm talking one device does maybe a meg a day after communicating constantly

There's a talk one of the engineers gives[1] (that someone else posted here so I'm watching it) about their architecture that's published in March of 2014, and in it he talks about ~550 servers, which includes 250 multimedia servers and 150 chat servers.

The only places he mentions 16 is when he talks about the "multimedia database". I think there were 16 sharded database servers.

1: https://www.youtube.com/watch?v=c12cYAUTXXs

I am personally very impressed by this, and I suspect it is one of the less-mentioned reasons they were acquired by Facebook.

I remember reading this when it came out https://blog.whatsapp.com/196/1-million-is-so-2011

BTW they were running ejabberd.

I agree that what they did with server utilization was impressive. However the blast radius was pretty huge if something went down. Also wouldn’t scale to images/video very well.

16 servers for 10^9 users doing voip and uploading vids? How's that possible?

it didn't have VoIP when it was aquired, and back then sending media was way less common.

You can offload a lot of the work to client devices themselves.

what were they accused of?

I think he meant acquisition.

Can you provide a citation that pricing wasn’t sustainable?

Having been an infra engineer previously, that pricing sounds reasonable for a messaging service based on infra costs.

WhatsApp supports free encrypted video calling and picture messaging, even for groups. No way that it was covering costs.

Why can't it? End-to-end encryption means you don't need to hold on to pictures for lengthy periods of time, and video calling can be done without a centralized service.

It does now, it did not when it was aquired.

Neither of those costs anything extra to run though. Since it's end to end encrypted with no sever backups the images and video can be communicated directly between the clients, WhatsApp just plays matchmaker.

It could, but that's not how it does, they store the (encrypted) media in their servers so that both phones don't need to be online at the same time, and also to avoid having to upload multiple times when you send to a group.

That said, they shouldn't need to keep them around for that long, unlike FB and similar.

Video and voice calling are peer-to-peer. The only cost is the signalling server. I have a similar service, and it scales pretty well.

Are you sure? They were adding 1 million users/day


Even at $1/year - their 1.5 billion active users should be an equal amount of revenue. I'd say that's enough to cover the cost of servers and bandwidth.

But that is it. If all you want is basic messaging then you are probably right.

However, if you are trying to build a messaging platform, which is what probably FB intends to do, then it requires more investment. Today, you might think that that is where the problem. All the users really want is basic messaging. However, in 3-5yrs from today, the reality may be very different (see WeChat or LINE in APAC) and WhatsApp maybe a complete misfit in that world.

All good products evolve. For something like messaging, if all you provide is a basic product, then you risk yourself being taken over by default platform apps (such as what happened with iMessage on iOS in US). You need stronger lockins and FB is well suited to provide those.

If you make messenger users pay anything for it, you’ll lose 80% of them on the spot.

We are told by Zuckerberg and others at Facebook that users want "relevant" ads.

Do users "want" ads? (Assuming they have real choice.)

Is it the "irrelevance" of ads that disrupts aesthetics and insults intelligence?

Or is it something else about advertising?

What assumptions do folks make when they discuss online ads?

Do they assume that they know what would happen if they tried to charge user fees for their "service"?

Do they assume to know what users would do? (e.g., look for alternatives)

Do they assume to know what other software authors would do? (e.g., publish alternatives)

What if Facebook thought that users would stop using the "service" if it was not "free"?

What if Facebook thought it is more profitable and there is less potential for liability to users (who have paid nothing) if the "service" continues to be "free"?

I prefer ads to paided services. I wish there was more honest advertising. I use to be concerned with tracking but the bigger concern is walled gardens.

I know many who would have paid 10 dollars a month. Some more, some less.

The network effects would have not worked, because there are many people that can not afford $10 a year. These people would have used an alternative and at the end everyone would have used that alternative (because network effects).

> The network effects would have not worked, because there are many people that can not afford $10 a year. These people would have used an alternative and at the end everyone would have used that alternative (because network effects).

There must be techniques to get around that. Maybe grant free or discounted accounts if you're connected with enough subscribers? Allow subscribers to gift free memberships to their friends? Maybe have a long "initial trial" (e.g. totally free for 1 year)?

WhatsApp and Facebook have many users in the developing world who could not afford a subscription unless the price was extremely low.

> WhatsApp and Facebook have many users in the developing world who could not afford a subscription unless the price was extremely low.

I would make sense to me to scale the price to the market. Make it $5 in the US and 5 rupees in India.

They did. Before it all went free

Don't ad earnings scale accordingly?

Salaries in the developing world are low, but they're not that low. Average salary in Brazil is $670/m. $10 per year does not seem overly onerous.

Median salary in India (WhatsApp's largest market) is $600-$1500 per year.

that seems like a wide median to me.

Simply because there's no one objective way to calculate that number. How do you define the total labor force? Do you count seasonal workers? Part-time workers? People who are unemployed but otherwise working age?

thanks for the clarification.

If there's cheaper/free alternatives?

$80 a year seems a lot for someone on $65k/y for an SMS replacement.

Why not just make it $10/mo or ads?

Because the people who are most valuable to show ads to are also the most likely to be be willing to pay $10/mo to not see ads.

I pay for Spotify and Google Play. If either one of them starts showing me ads, they're gone. It's not me I'm worried about at this point. It's my kids.

Some are likely far over that threshold. However, I doubt everyone willing to pay 10$/month is worth more on average.

Facebook makes $7 per month per user in the US and Canada. So, it's likely fairly close though.

But it doesn't matter if you lose money on those people. The $10/month easily carries all costs even if 0.1% of users pay and the rest gains them zero. (At least, back when I did the math in ~2015, when they were probably a bit smaller than they are now.)

Facebook alone makes $23 per user (from US/Canada) per month so it probably should rather be $50 than $10 per month.

It's per quarter I think.

I believe that was one of the questions Zuck got asked in Congress - why not make paying for FB (and it's subsidiaries) optional in exchange for an ad free, non-data harvesting experience. I get it that many people want the service free and that expense needs to be recouped, but it would be nice to have the option. Perhaps it should even be a legal requirement to have the option.

I think YouTube has something like this (in the US) where you can pay monthly for an ad-free experience?

That makes no sense. People who can't afford $10 a year are not randomly distributed through the world. You can have a North America network just fine.

They used to charge €1/year. It seemed extremely little, but I did the math once and it worked out (around 2015, when they already had about as much market share as they do now in the Netherlands), including things like wages. There was even money left for a Ferrari for every employee. This is assuming that they actually charge everyone by the way, which they weren't (I don't understand why -- it seems cheap enough that even people in a developing countries could afford it).

I too would gladly pay (anything reasonable) if it meant they'd split off from Facebook and become in dependent again.

Because people gravitate to things that are free, especially in third world countries. And not just because they can't afford it - it can be issues such as not having a credit card.

The reason whatsapp got traction in the first place was it was free (for a year+) when SMS was not. If Whatsapp cost $1 then people would use whatever was free.

Same here, and use GDPR to delete all Social Graph edges siphoned off after the acquisition.

Yet the 1$/Y plan was quickly abandoned due to a massive public outcry.

$10 a month for a messenger? $120/year? How many people do you know who'd pay that? Back then unlimited SMS cost $10 a month. So why would people pay the same for something which only purpose (back then) was to save cost on SMS?

What's really interesting about this observation is that the problem with the subscription model is exactly that it prohibits perfect price discrimination whereas advertising does not.

I know many who would have paid 10 dollars a mont

BlackBerry was the combo of the handset + the backend services hosted by RIM including BBM and people did pay a monthly fee for access to the latter (over and above regular carrier charges)

How ironic then that they sold to the very epitome of that example... and only speak out now, long after the $19B acquisition.

It's funny how large sums of money will do that. I doubt I'd behave any better if I'm honest about it.

It sounds like they've been fighting for users' best interests (and somewhat winning) for the past 4 years. Perhaps they were just naive.

I miss the pre-internet days when all we had to worry about was Wintel's stranglehold on the desktop market and crappy DOS viruses. I thought Linux was the light at the end of the tunnel but instead it was just a false dawn.

Richard Stallman was a prophet

And that quote is immediately followed in the article by—what else?—an ad. I have to wonder if that bit of irony was deliberate.

We should seriously consider to simply outlaw targeted advertising. It would solve a lot of problems.

Yeah. I don't pay for messaging and don't want to see ads. The world will continue to go around since money falls from trees.

Do you pay for cellular data or home internet? You are paying for messaging.

Well, messaging is baked in - even multimedia messaging - of mobile technology, but greedy telcos had to charge 0.10€ for each so people just associated them to expensive and jumped as soon as the first viable option emerged.

Yeah - so why don't you use those messaging apps vs. Whatsapp or Messenger?

It might be pertinent to see Koum leaving as a sort of canary. Koum promised to keep WhatsApp secure, and it's clear that with his departure he feels that he can no longer do this anymore.

It might be. But it's also just over four years since Facebook bought WhatsApp. Were his FB shares on a four year vesting plan?

I don't mean to be too negative, but I'm still very disappointed they sold to FB in the first place. There was no need to do so - WhatsApp's business was sustainable. And surely they must have considered this possibility?

Have you ever been on food stamps, in a foreign country, only to get offered Billions of dollars a few years later? (yes, that's Jan Koum).

Frankly, I can easily defend his choice of selling to Facebook.

Instead, good point on his vesting.

You imply a tale of woe by saying "few years", when it was really closer to 2 decades. He was on food stamps as a child, he'd worked at Yahoo for a decade and started working on Whatsapp with hundreds of thousands of dollars in savings, and at the time of the acquisition their finances were extremely healthy.

So, after two decades, the memory of having been on food stamps goes completely away, you say? And it doesn't count in that decision anymore?

Let me remind you that elderly people still have very vidid memories of famine and war troubles even 70+ years later.

It seems to me you are just being pedantic.

It seems to me that you're using someone's personal history to project your own personal views. We have no idea if he is motivated by what you're saying. The OP's counter point is just as valid as yours.

Personally, if I'd grown up on food stamps and was deeply concerned for my future welfare you can bet I would have sold before the price reached $18bn. I'm quite sure WhatsApp had many offers over the years.

Was the business sustainable? They tried some form of paid apps or recurring subscriptions several times, but no one I know actually paid for WhatsApp ever. I imagine they were just burning through VC funds.

Actually in one of their interviews after the acquisition Koum said that they still had every single penny of their VC money, they hadn't spent it. He even showed the bank statement showing it was all there before they took a second round of financing from Sequoia. Jim Goetz said they were the only startup we'd ever dealt with that was paying income tax before taking any money.


It does not take much money to run a messenger, especially one that does not store conversations or files server-side once they are delivered.

Doesn't matter if revenue is less than costs.

I paid 79p for a lifetime subscription but yeah that probably wasn't going to cover costs. They used charges partly to limit uptake when the servers were struggling I think.

I paid for it.

yeah so did I and all my friends. $1 whatever.

I mean... 19 Billion... it's hard to pass that up.

Oh, I know. On a human level I can't blame anyone for making that choice. But then exiting with a big pile of cash while complaining about what Facebook is doing feels a bit... eh.

What else should he do? He took billions of $ along with a promise that he'll keep control. FB lied, so now he's leaving. I can't blame him here. Money can easily buy a bit of naïvety.

> What else should he do?

That really depends on what was stated in the terms of acquisition. At the most extreme sue to demerge.

But is that a fight he is willing to accept?

That'd be gutsy, but suing wouldn't have a chance unless he had promises in writing, which I doubt.

I'd rather have him do that then decide to stop complaining and give Facebook a pass now that he's one of them.

FB tripled in the last 4 years. So, a 4 year vesting period would have been a good thing for Koum!

>WhatsApp's business was sustainable

Was it? Sure, they had a lot of users, but most weren't paying. FB said that the revenue was so small that it wasn't even worth charging. They brought in something like 10M on 0.5B users, hardly sustainable.

> They brought in something like 10M on 0.5B users, hardly sustainable.

Why not? Their team was tiny and they spent next to nothing on advertising (nor needed to). $10m seems like a pretty decent amount of money to be spending on servers in a year. (I'm not saying it definitely was fine, just that I wouldn't assume it wasn't)

Curious. How much do servers cost for serving 1B+ users? Does it really consume millions of dollars if there is no ML/analytics being generated? I used to think that as you scale you start getting cheaper rates.

Mark Zuckerberg answers to Koum leaving:

"Jan: I will miss working so closely with you. I'm grateful for everything you've done to help connect the world, and for everything you've taught me, including about encryption and its ability to take power from centralized systems and put it back in people's hands. Those values will always be at the heart of WhatsApp."


A PR crafted response that doesn't indicate anything. Facebook is one of the largest centralized services on the internet, and has no desire to lessen that.

> I'm grateful for everything you've done to help connect the world, and for everything you've taught me, including about encryption and its ability to take power from centralized systems and put it back in people's hands. Those values will always be at the heart of WhatsApp.

Of course, we do have to look at this response, as well as Koum's original post, through the lens of a PR piece.

"Connecting the world" to our lucrative public manipulation platform. I'm sick of the phrase.

More "connect the world" crap, the same spiel from the Congress hearings.

I'm sure he thinks he means it, but at the end of the day he's just going to scrape it to sell more ads.

This also points that way:


>WhatsApp has signed an undertaking declaring that it will not share any EU user data with Facebook until the General Data Protection Regulation (GDPR) comes into force on 25 May.

If true, and still a big if, since the journalist seems to be conjecturing -- this might have implications for Facebook's future acquisitions.

Acquiring social networks that get to scale is an integral part of Zuck's strategy. It is a fairly smart strategy since one company cannot successfully lead or copy all the innovation - and social networks are very "taste-dependent" products. Zuck understands that Facebook is a big incumbent, and as with any incumbent there would be 'anti-incumbent' products. He was just willing to buy these products without too much fuss.

His willingness to overpay for these companies has been a part of a long-term dominance strategy. Maybe he has one or two misses like Snap; but by and large, his sense for "pricing" these companies and a no-nonsense "Corp Dev" approach could be thought of as a competitive advantage (plus he has proven that he can do it repeatably). The lawyers don't get involved until much later - he "leads" from the front when doing these deals. It is not very common in large-company-land.

If Jan Koum, who is very highly respected (he is truly a no-bullshit product/management person) leaves for the "wrong" reasons, it might have long-term implications for other companies that Zuck wants to buy in the future. Thus leaving an opening in the market for an 'anti-incumbent' offering to thrive.

I don't think a normal founder would refuse $19B acquisition offer - it is a very big number. I don't know anything about Jan Koum, but he has already pocketed his billions. So whatever signal he gives by leaving is pretty clouded.

The old saying goes: "if you can put a price on your morals, then most likely you didn't have any morals in the first place"

I understand your sentiment, but it isn’t just him he’s making the decision for - he would have turned down the money for his employees too. IMO that’s much harder to do than turning down more riches for yourself.

This is huge. While WhatsApp is not as big in the US, it is the de facto messaging platform in most of Europe and even Latin America. It uses the Signal encryption protocol. If this fact changes, people deserve to know.

It feels like there have been surprisingly few internal leaks from Facebook employees, compared to the rest of FAANG. Now would be a good time for someone to blow the whistle.

WhatsApp is big in India. The service went down for over 10 minutes at around 1/1/2018 00:00 Indian Standard Time, presumably from people over there wishing each other a happy New Year ahead.

Not to mention much of Southeast Asia as well.

And in south america. Basically in all 'emerging markets'.

Whatsapp made a smart decision to make a java app that worked on non smartphones. Hence it being app of choice in places where many people didn't have smartphones.

Perhaps because Line and WeChat reign supreme there?

I was generally referring to the Indian subcontinent and neighboring areas. I'd say Line and WeChat are more popular in eastern Asia.

I have more people on LINE in singapore than what’s app. People love stickers. Thailand/Cambodia seem to use line more too. These are SEA countries.

The main things I use what’s app for is when delivery Drivers or companies message me to say they are on the way or check if I’m home so they change deliver.

I have no one on Line in Singapore.. only Thailand. WeChat in China. Whatsapp and FB messenger in Singapore.

And Africa

Worth noting that the other founder, Brian Acton, already left Facebook last September (and in fact tweeted #DeleteFacebook recently), so it is pretty obvious that the relationship between the two groups has been less than perfect.

I'm pretty certain that they didn't want to sell WhatsApp in the first place, and knew the privacy risks that having Facebook as an owner would bring...but of course $19 billion is enough to settle a lot of issues.

I personally consider WhatsApp to have the same level of security/privacy as Messenger. If you need E2E encrypted messaging use Signal instead.

With that money, a new messenger can be created, preferably one that uses an open E2E-encrypted protocol that supports decentralization.

which seems precisely why Acton donated $50 million to the Signal Foundation and is taking an active role in a parallel for-profit entity.

How does Signal plan to be long term financially viable? If they can't find a model that works why won't they go the way of whatsapp or the dodo?

It's a non-profit, running off of donations. https://freedom.press/crowdfunding/signal/


It’s already a model, and it already works. There are no VCs, there is no exit.

The worlds most powerful collection of data is run without a business model.

They ask for help once a year, and help is given. Signal could operate very similarly to Wikipedia.

They could get some inspiration from Mozilla for example.

WikiMedia more than Mozilla. Most of Mozilla's revenue comes from search/advertising deals struck with Google and others. WikiMedia relies on donations alone.

Why not just use Signal? Didn't moxie implement the e2e in whatsapp anyways?

My main problem with Signal (and similar apps like Wire) is syncing messages across devices. I'd often find myself turning on my home computer after work and having to wait a while for the desktop app to finally finish syncing with my phone and allowing me to chat. Call me spoiled but after experiencing that every night it started to grate on me.

WhatsApp uses the Signal protocol, but somehow managed to make this work with WhatsApp Web, so the limitation isn't inherent to the technology.

The last time I had looked into it, somebody on the Signal github suggested otherwise. I hope you're right but either way that doesn't change the fact that this problem is still present today.

WhatsApp web does key exchange over QR code, which is a fascinating choice.

Doesn't this apply to 100% of communication apps (IRC, chat, email, social media)? What's the alternative?

Wire takes a few seconds to sync messages to a powered on device, same as an email client.

I'm glad it's working well you but neither Signal nor Wire took acceptable amounts of time to sync my messages versus every other networked app I use.

Do you have a github issue link for Signal or Wire?

xmpp seems to have good syncing

While Signal is a good start, you do lose the advantage WhatsApp: its entrenched market dominance and network effect.

Network effects with messaging are weaker.

If you convince just one of your friends to hop onto signal, it can be useful - make it someone you message a lot and go from there. A few months ago I had just one person I used it for. Now it’s in double figures and growing.

Every hacker who gives a damn should install signal and encourage others to use it. There’s just no downside.

You don't even need to convince one of your friends initially - just use it as a regular SMS texting app. That's how I started, and now I'd guess about one third of my friends have Signal. (Though I guess it helps that I don't use WhatsApp either.)

I'm not sure why this is downvoted. While yes, network effects come and go, currently WhatsApp has a market dominance. I tell people I use Signal, WhatsApp, and Text, but prefer Signal, and most people either use WhatsApp or Text. It is hard to get people to switch. That is the reason Facebook is so dominant, even though it is common for people to dislike a lot of it.

Market dominance and network effects come and go.

Eh. Like Tox?

All this "secure" messengers forget about rubber hose decryption that is used in majority of the world.

The thing about rubber hose cryptoanalysis is that it doesn't scale. Even the most depraved of governments will have to purposefully and deliberately choose their victims rather than vacuum and process all data they have access to.

Luckly, rubber hose cryptoanalysis is not a concern for most people, which is where crypto is needed the most.

To clarify:

Any centralized messaging can not be secure by definition.


A lot of people are forgetting what a lot of NSA types can do with metadata.

(IIRC Italians caught CIA spies with phone number metadata analysis software supplied by... US!)

Any messaging app that is associated with a phone number calling itself "secure" is just maliciously stupid.

I'm really curious why they thought this would go differently than any of the other companies that Facebook acquired…or did they just think that they could stick with WhatsApp for as long as they agreed with Facebook, and then take the billions they earned and try to use it in a way that aligned with their principles and end up having more benefit for society?

This is no joke. It reminds me of when Skype used to be secure then somehow a backdoor was introduced following (or before?) the acquisition by Microsoft. History repeats itself, and humans have yet to learn from the past.

In this case, strong E2E encryption was introduced after the acquisition (though presumably it had been in the works previously).

OK! I was referring to this and it was before the acquisition indeed: https://news.softpedia.com/news/Skype-Provided-Backdoor-Acce...

Pardon my skepticism, but Microsoft has most definitely advertised to the TLAs that Skype communications are available for review.

> Eighteen months later, the promise not to share data evaporated. Facebook pushed WhatsApp to change its terms of service to give the social network access to the phone numbers of WhatsApp users, along with analytics such as what devices and operating systems people were using.

Hmm... doesn't sound like the Facebook we all know and love.

It's been what? 3 1/2 years? He was probably under contract to stay for 3 years and he now has a big pile of money and the power to do what he wants.

So he gloriously exits on principal and plays hero for a day while thumbing his nose at the company that made him rich for the decisions that made him rich.

Well... that’s what I’d do. What would you?

I'd take a long hard look at myself, my current opportunity, and what I want to do. It would be hard to walk away from the opportunity to occasionally influence someone like Zuck, or the opportunity to occasionally influence the global end user base of Facebook.

I'm not saying what he did is a bad thing. It's th human thing. More saying that his position isn't all that newsworthy. It's pretty easy to take a pot shot on your way out the door. If changing minds was his real goal, staying and making change happen from the inside is much more realistic.

I get what you think. Although it’s near impossible to change things when you meet the combination of people who do not listen and money.

He at least did the honorable thing by issuing a public warning on his way out.

I bet the Facebooks learn from these experiences and start requiring NDAs for their acquisitions.

Anyway, someone can just build another Whatsapp.

Well, he could have just said so long, thanks for the cash, I'm off to get a big yacht. I think he does care about the stuff he's complaining about.

Koum has also liquidated the bulk of his Facebook position at this point. He's sitting on $8.4 billion in cash and $2 billion in remaining Facebook stock (he previously gave 12.6 million shares of Facebook to the Silicon Valley Community Foundation; worth $2.1 billion at today's price).

Looking forward to what he does next. He certainly has the resources to do almost anything that catches his attention.

Sad news. WhatApp really feels to me as the future of social networks and its massive numbers tend to prove it.

1:1 chat and phone calls to communicate to your friends, groups to keep in touch with people you are less close to, and status in the extremely rare case that you want to briefly show something to all of your contacts (but without all the problems of FB: your contacts are all people you actually know fairly well, no like and similar bullshits that create so many problems, no pictures stored forever, etc.).

At the same time, I already saw many people switching to telegram. It seems impossible for whatsapp to decline given its current numbers, but who knows really.

Isn't that AOL Instant Messenger, then, just on phones?

These sorts of disagreements and exits happen all the time, but they are usually kept quiet and excuses are made. It's unusual to see this done quite publicly, apparently hand in hand with a journalist. I'm guessing he wanted to spark some debate.

Of course, that's why the article was written. Here's the first line in it:

> The billionaire chief executive of WhatsApp, Jan Koum, is planning to leave the company after clashing with its parent, Facebook, over the popular messaging service’s strategy and Facebook’s attempts to use its personal data and weaken its encryption, according to people familiar with internal discussions.

So obviously it's meant to spark some sort of discussion on Facebook's attempts to remove security features so that it can monetize the app better.

I don't see any evidence that Koum collaborated with the author of this piece. It's more likely that the article is entirely based on leaks and rumors, like the majority of Silicon Valley gossip articles.

It could also be a "no really, I'm leaving" announcement to end debate internally. He leaks it publicly and baldly and now there's no going back.

Taking a huge buyout then trashing your acquirer for PR points a few years later seems in poor taste. They knew exactly what they were getting into when they accepted the FB megabucks.

Presumably he feels that Zuck is reneging on his verbal agreements made during the acquisition process. Speaking out publicly is the appropriate recourse.

Zuck fucked them and the regulators over when he promised to keep WhatsApp independent. The sale would have never gone through if he hadn't promised that.

This is the truth, FB is being fined by EU regulators for dissembling.

In the interests of competition and data protection Facebook should never have been allowed to swallow Instagram and WhatsApp and Microsoft should have been prevented from acquiring Skype and LinkedIn.

Network effects are too strong online to allow mergers of this sort and the potential for abuse too great from both state and non-state actors, not to mention invasion of privacy issues.

The bar for mergers and acquisitions ought to be way higher in this domain. If regulation does not fix this I believe these tech companies ought to be divested of these products.

Ultimately paid federated services and free & open source software are the only true countermeasures to these very real threats. I would nearly go so far as to say that we should all chip in to make this become reality.

Actually, I’m surprised a guy with $8 billion in his pocket worked a day job at Facebook this long.

Others have speculated he was waiting to be fully vested in stock options. The other possibility that I don't know if true or not was perhaps he had a contract that he did not want to break - I have worked at a startup that got bought and they fired the founders as soon as their contracts were up.

There are always contracts and vesting periods.

I understand this goes against the current ethos but honestly, you can't provide an essentially free service and expect things to just keep running sustainably. Nobody has proven that a social network can be run successfully without advertising and analyzing user data. I wonder what Mr. Koum offered as a counter-proposal for keeping the lights on at what should be an exorbitant cost with their userbase. My guess is, not enough, if anything.

Note: I do not work for facebook, nor am I huge on any social media, although I am a "light" user of both facebook and twitter.

Whatsapp is not really a social network, it's a (not very complex) IM. The costs are probably quite different (number of features, long-term storage of media, concurrent access to the same messages, etc). Supposedly they were running with only 50 engineers supporting 900M users when they were acquired. I don't know their hardware costs, but overall it doesn't seem like an expensive operation.

It still needs to have a business purpose. 50 engineers + salaries/insurance + server costs for billions of users. Yea, not cheap.

They only raised $60M total until getting acquired, so it can't be that expensive.

I'm not sure how you explain to future investors that you want to raise 60 M with no plan on returning that investment. Companies != charities.

...selling advertising via selling your users’ data for analysis is the easiest way to pay for the services but it’s at the cost of the users‘ basic privacy.

There must be a better way (albeit more difficult for the software company).

How about users actually paying for it? I’d pay a small amount

Ok WHY then, has nobody tried said better way. Why won't anyone invest in it? The point I'm trying to make is that it's unproven. Maybe you're willing to pay a small amount (and what amount is that exactly). What about the rest of the world?

I think people "want" there to be an easy solution to this and are just pointing out problems without considering whether such a solution even exists.


What about it? They are funded by non-profit. Unless you're suggesting you're going to get anything near the feature set of current for-profit social networks. No major common features = no adoption by the general public. I'm talking face filters, gifs, emojis, stickers, videos, reactions, and the list goes on.

Whatsapp doesn't have many of those, yet they have 1.5 billion users.

In fact, I think Signal has more of that stuff; there's no Gif Search in WA: https://signal.org/blog/signal-and-giphy-update/

Yes because they were a "free" messaging service that could supplant expensive SMS carriers. They are different products at the end of the day, and a messaging service was acquired by a social network. Anyone can get tons of users selling a product at a loss. This is the standard startup story.

Why don't you approach an investor yourself and just start it.

> Facebook’s attempts to use its personal data and weaken its encryption

What’s this about weakening WhatsApp’s encryption?

Yeah, the article is super-vague about that:

> In 2016, WhatsApp added end-to-end encryption, a security feature that scrambles people’s messages so that outsiders, including WhatsApp’s owners, can’t read them. 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.

Not sure what this means. "Weaken" is kind of a confusing term, FB either has access to the message content to feed in to adsense's gaping maw or they don't.

> FB either has access to the message content to feed in to adsense's gaping maw or they don't

There is a lot of grey area in between. How metadata is treated, whether encryption is turned on by default, what about the messages are encrypted, how they're encrypted, et cetera.

I don't understand why allowing businesses to use WhatsApp would require weakening its encryption. Can anyone parse the meaning of this, or speculate about why that would be necessary? It makes no sense to me.

Are they perhaps implying some kind of central analysis of sent messages for targeting purposes?

If I were to speculate, and it would definitely be speculation, I would say it was adding some sort of key escrow for encrypted chats in the Enterprise. It's not uncommon for escrow to be a requirement in Enterprise encryption products.

This is my experience as well.

My guess is that Facebook wanted to build in some kind of MITM attack so that businesses could see a log of their employee messages.

Later in the article, the context for this is provided: that business applications of WhatsApp may have needed features Koum perceived as weakening encryption. Which rings true, because pretty much every enterprise messaging application allows admins to override privacy.

I'm saddened by this new, but more so for Android.

WhatsApp was my main counterpoint for anyone using iMessage as a trump card for getting an iPhone with its end-to-end encryption and the status indicator that the other user is typing something.

I guess that people buy iPhones because they want iPhones, not because of iMessage, at least here in Europe. If they would insist in using only iMessage they would message only a few of their friends. Everybody I know uses WhatsApp, both on iPhones and Androids and only one person ever bothered to confirm the certificate for the end to end encryption. We did it because both of us are tech guys. It's definitely not at the top of the priorities of the average person.

>ever bothered to confirm the certificate for the end to end encryption.

Wait, you need to do that manually? Most of times whatsapp just tells me that somebody's keys has changed and that's all.

You have to verify the key. In the chat with a friend, tap the three dots menu, View contact, Encryption. You see that the description ends with Tap to verify. Tap. You get a QR code that your friend must scan. Now you know that you're encrypting the messages with your keys and nobody is MITMing you.

You have to do it again when somebody reistalls whatsapp or moves to anothwr phone. If it's you, you have to do it for everyone. Guess why so few people does it.

Also, the GUI does very little to direct people to verify the keys and confirm that the communication channel is safe.

yeah, everybody that I know uses whatsup on iphone. never used iMessenger. whatsup is so popular in europe regardless of platform.

It's called iMessage. I suppose it's about who your friends are. I use iMessage extensively with my family and most of my friends in Europe. I don't think I have a single family member without an iPhone.

Use Telegram. Russia blocked it since they refused to hand over private keys to the government. Interestingly they never blocked WhatsApp.

The way Whatsapp encryption works, they don't have the keys to hand over. Telegram is unique in its state-vulnerable encryption implementation

This is incorrect. WhatsApp encryption keys are managed on server and hence can be MITMed on state warrants quite easily by WhatsApp unless you are very careful to follow key changes and verify keys physically - and even then how would you know since it's WhatsApp app that is showing the key, and not something you generated independently out of band with a different program.

What the encryption does is prevent non state level actors from breaking into your conversations.

>The way Whatsapp encryption works, they don't have the keys to hand over.

Is this by design or can they be forced by fb to give up the keys which gets stored in the server and still keep functioning? As far as I am aware its the phones which generate and maintain the keys.

Yeah, use a messenger with E2E off by default, no multi-device E2E sync and questionable crypto..

Do I think it's noble that Koum is leaving because of his convictions? Yes. Do I think this is a good sign for Facebook's stock? Yes.

> Do I think this is a good sign for Facebook's stock? Yes.

Why? Is having a person on the board that provides a moral check on the others a hazard to Facebook's stock price?

It can be. Now they can start advertising on WhatsApp and begin to release that revenue giant.

With recent regulation, it might be better in some scenarios to not push advertising on some platforms, or at least have some sort of pushback before it's implemented so that it's done in a way that doesn't open them up to fines.

Is having a person on the board that provides a moral check on the others a hazard to Facebook's stock price

Absolutely. You and I can agree it is a good social thing, but when it comes to revenue and growth that can be a huge impediment.

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