In a recent Forbes article, American entrepreneur Kalev Leetaru argued that the trend in social media towards user privacy was making it far more difficult for analytics companies to mine social media data. He evidenced the trend by highlighting the rise of WhatsApp, as well as Facebook’s increased emphasis on privacy, and comparing them with the decline of more open platforms - specifically Twitter. He noted that, ‘In a world where social media means private conversations among friends rather than announcements to the world, there isn’t much data for outside social data miners to analyze. Much like the big data revolution itself, even as we are being flooded with an ever-greater world of data, in many ways we are able to see less than we ever have.’
Leetaru’s point is difficult to contradict, and WhatsApp’s decision to roll out complete end-to-end encryption on its messaging platform would appear to reinforce his claims - showing the public desire for more private platforms. And this trend will inarguably make it far more difficult for social media analytics firms to discover customer insights. However, it is extremely unlikely that it will prevent Facebook from gaining as much as they can from any data they can get from WhatsApp. All the move really does is show that control of social media data, and the insights garnered from it, is being further concentrated into the hands of Facebook - a state of affairs that has the potential to be tremendously damaging for social media analytics and innovation in the sector.
WhatsApp has long made it a point of pride not to sell ads, and founder Jan Koum is well-known for his hatred of advertising, once telling Wired, ‘There's nothing more personal to you than communicating with friends and family, and interrupting that with advertising is not the right solution ... And we don't have to know a lot about our users.’
In a post written in 2012 entitled ‘Why we don't sell ads’, Koum further pushed the point, writing: ‘At every company that sells ads, a significant portion of their engineering team spends their day tuning data mining, writing better code to collect all your personal data, upgrading the servers that hold all the data and making sure it's all being logged and collated and sliced and packaged and shipped out... And at the end of the day the result of it all is a slightly different advertising banner in your browser or on your mobile screen.’
Obviously, since Koum wrote this blog post in 2012, the company was acquired by Facebook - a company that relies primarily on advertising and data mined from its users to improve targeting. Mark Zuckerberg has promised that this data won’t be used to improve consumer targeting in Facebook ads, but Facebook paid $19bn for WhatsApp - a product that is available for free. If they are not mining this meta data for customer insights, then it’s difficult to see how they could possibly be making money from it. End-to-end encryption generally conflicts with the advertising model, and therefore logically means lower revenue.
To say that end-to-end encryption means Facebook and WhatsApp are no longer holding any data would be misleading, although this appears to be what they’re trying to convey. Upon downloading WhatsApp, users are asked to sync their mobile phone's entire address book to its servers so that WhatsApp can discover who, among the users' contacts, are using the App. This makes things more convenient for the consumer, but it also means that WhatsApp now has all of the data from this contact information, even for contacts who are not using the app. This means that Facebook has access to user's behavioral data and personal information. Even without being able to see into the messages, they are also still able to access location sharing data. Also included in the data that WhatsApp will still be able to retain is information about who has communicated with whom, when this communication took place, and 'any other information which WhatsApp is legally compelled to collect' - a deliberately vague term if ever there was one.
Ultimately, the information held within the tens of billions of messages sent over WhatsApp contains tremendously valuable customer insights worth hundreds of millions in revenue. It’s highly improbable that Facebook - a company that fundamentally makes its money from data mining user information - would just give this up for the sake of principles.