This article seems a little unfair to the WhatsApp founders when it suggests they should have known that any assurances Facebook made to them as part of the acquisition were obviously lies. Sure in 2018 it might be obvious to most of us that nothing Facebook says or promises can be trusted but I don't think that was necessarily as obvious when the acquisition happened and they can be forgiven for thinking they weren't being lied to.
Nah, 2014 makes no material difference. It's not the recent scandals that have somehow revealed Facebook to be the spiritual successor to Microsoft's "embrace and extend" strategy; this has been obvious for at least a decade. Maybe the public didn't realize it yet, but anyone in tech, especially a successful founding team would have been well aware.
That said, I'm not going to demonize these guys. Brian Acton clearly is repentant and putting his money where his mouth is in terms of supporting Signal, and that's worth a lot more than some principled nobody who never has enough clout to further his own principles in society.
They were really the second big acquisition and they got a huge valuation. Instagram was running pretty autonomously at the time (2 years prior) so between talking to them and seeing the arrangement and the belief they would be valued as employees like their company; I get it. Also it was huge money that can give you rose colored glasses.
I think what happened in their head is, they knew Facebook was kind of lying but they thought would be strong enough to prevent the worst from happening. They had built a very successful app in very little time with very little ressources; they just felt they were invincible.
So he repents from creating a walled garden that abused its power and is now funding another walled garden that has the same ability to abuse its power instead of supporting any of the federated alternatives.
I am not convinced Brian learned the right lessons here.
I think demonizing the guys behind WhatsApp is entirely warranted. They built up a large userbase around promises of privacy and encryption, and then promptly sold those users to fucking Facebook. Whether they were just gullible and didn't do their due diligence, or if they were malignant, doesn't really make a big difference.
This gets the timeline a bit wrong. WhatsApp’s user base was largely built up during a period of lax security, including unencrypted message databases on Android SD cards, and easily spoofable addresses. The introduction of end-to-end encryption in conjunction with Open Whisper Systems was not until well after the FB acquisition and plans for it were undoubtedly part of the acquisition terms.
Contemporaneous to this was the rewrite of the privacy policy to allow sharing of metadata between FB and WhatsApp user accounts, which was a bit of a sell out.
Even prior to that, WhatsApp did not keep the messages in their servers. Yes, that's not the same as encrypting them. However, they were very clear from the beginning that they won't mine the messages for their ad-value.
> I think demonizing the guys behind WhatsApp is entirely warranted. They built up a large userbase around promises of privacy and encryption
WhatsApp end-to-end encryption didn't actually begin until after the acquisition to Facebook had already gone through[0].
I am certain that, as of 2012-2013, WhatsApp wasn't even consistently using TLS to encrypt traffic. That's what made it so shocking when they suddenly leapt from some of the worst security practices of all messaging apps on the market to the best[1]. They built a massive userbase long before any efforts were made towards privacy and encryption.
[1] Signal didn't exist at the time, and yes, TextSecure existed, but almost nobody was using it compared to WhatsApp or any other chat app on the market today.
It's not like they secretly sold it Facebook. People knew what Facebook was about by the time of the acquisition and either didn't care, did a wait-and-see or switched to an alternative. Perfectly reasonable behavior by everyone involved. Your standard for "demon" is rather low ! :-)
They didn't chose it based on privacy. But they have an expectation of privacy. The post office doesn't read your letters, so why would you expect Facebook to read your messages?
It's difficult to understand for the average person just how much Facebook knows about you and what it can do with that information that isn't in your direct interest. At best they think it's weird how long-lost acquaintances show up as suggested connections, at worst they only notice when Facebook does something directly useful to them.
Sure, you can blame the users, but that's kind of unfair if you consider what kinds of markets WhatsApp already dominated before the acquisition.
Well I do and I switched after they announced e2e encryption, otherwise I never would have used it.
Why does every thread on Hacker News have to ask this freaking question? It’s obvious that the general public is computer illiterate, Sherlock, just like it is obvious everybody knows someone “good with computers” that can tell them what to use and having lived the sunset if Yahoo Messenger in my country, Facebook should be scared as it happened practically overnight.
A LOT. Even in developing countries people paid ₹50 (or the equivalent of a $1). WhatsApp changes this model a bit by partnering with carriers. Unfortunately my memory is not clear on whether that was before or after the acquisition.
Edit: Note: WhatsApp publicly claimed that a billion users paying $1 each is enough for them. Also remember, a lot of the technical complexity, infrastructure requirement and data storage requirements went away in their model of being just a conduit. They had no interest in reading, parsing, mining, storing or monetizing the messages. This let them run it with a lean crew.
That was technically their business model, but they gave you one year free and also extended your 'subscription' indefinitely if you decided not to pay after that - basically the WinRAR of messaging apps.
On iOS the app used to be $0.99 (one-off), which probably made them a couple millions. In 2013 they moved to a subscription model [1] but this was never implemented; I think nobody was ever charged.
I paid for it too. I like to think that "idiots" like us prove that there is demand for a paid ad-and-tracking-free messaging service, so maybe our efforts weren't in vain.
For a few billion dollars, it's pretty easy to see myself doing the same thing.
We're entering a world of a widening disparity between rich and poor. A billion dollars puts you, your children, and their children in the very wealthy side of that line for their entire lives. That's hard to say no to.
Also, the extreme divide between rich and poor has always existed. I’ve never seen a strong data-supported case that it’s any worse today than 100 or 1000 years ago.
The whole inequality discussion we've been a few years now all started with this book from Thomas Piketty (a statistical analysis). Maybe start with reading that?
I agree with this point, as I have a strong distaste for the premise the above poster used: "This is the way things have always been". Implying, why try to change them? Women regularly died in childbirth for thousands of years, but do we hear anyone complaining about knowledge of sterile fields and advances in modern medicine?
If anyone is looking for data-driven cases on the scale and negative consequences of the increasing divide between rich and poor, I've found some good resources in Robert McChesney's The Digital Disconnect, Joseph Stiglitz's The Price of Inequality, and probably most famously Thomas Piketty's 2014 book Capital in the Twenty-First century which Gates himself even recommended, ironically enough. All these books come under criticism for supposed ideological undertones, but even skeptics generally respect the underlying economic data.
Thank you for the sources. I’ve read about the latter but not the others.
I don’t know if inequality can be reduced on a macro level, but I would not bet on it.
Some things can be changed and some can’t. Your example of maternal health is great—we should be focused more on those types of biological things we can change, imo. Who cares if someone is richer than you if you are healthy and happy?
But inequality seems to be something nature loves. The sun gets 99% of the matter in the solar system, for example. Humans decimated all other large predators—examples abound.
Concentrated freedom and decision making power (for which money is just a proxy), might be a necessary evil. I think barring a drastic black swan paradigm shift (world government, computer overlords, or maybe some undiscovered push to an equilibrium driven by globalization...), there’s not much that might change that.
The difference is that wealth concentration is increasing, and that as a society we aim for what sort of reality we want to live in. Society is not a physics experiment so we try and influence it to suit us, instead of being a mirror of the natural world.
Well sure, the reduction of inequality is not a smart bet to take in the morally impoverished social climate that we live in. The original Pareto principle itself was born out of observations of the natural distribution of wealth among populations, so changes to that distribution will require active effort and hard work to create a sustainable economic structure. I'm not saying people don't have good reason to be cynical about improvements in the Gini coefficient across the world.
But you must recognize that human society is simply the summation of many individual choices, and there is a big difference between saying something is unlikely to happen, and something cannot happen. Pragmatism and cowardly cynicism are two different positions with dramatically different possible outcomes. Instead of accepting Keynes over Polanyi as a foregone conclusion, try looking at the individual choices that were made to get us to this position. Repealing Glass-Steagall in the '90s was a choice. Deregulation in the '80s was a choice. 100 million Americans eligible to register choosing not to vote out politicians who make these decisions are 100 million choices. There may be systemic reasons for why those choices were made, but I am simply right now trying to get you to see that these outcomes are not foregone conclusions.
Your justifying logic for holding your beliefs is certainly not rigorous -- you can just as easily find examples of nature favoring equilibrium and balance in every conceivable force diagram or cell membrane as you can of the existence of inequality. If you are looking for a nature metaphor, why not try a chemical reaction? In an inert environment, oxygen molecules will not spontaneously transform into carbon dioxide, even though carbon dioxide is a more stable chemical state. But once the necessary conditions exist -- the presence of sufficient carbon and enough available activation energy to perform the reaction -- a single spark can cause a chain reaction to convert every single oxygen molecule present into carbon dioxide molecule. No matter if previously, every oxygen molecule was insisting, "But this is the way things have always been for us! Some things can be changed, and some things can't."
We have not yet reached the necessary conditions for our society to reach a more stable state, so you are not wrong in saying that it seems unlikely that the reduction in inequality can occur without certain tipping points being reached. But it is folly to conclude "...there's not much that might change that" without educating yourself on the missing conditions and realizing that it is possible to slowly work towards achieving those conditions or empower others who are taking steps to achieve those conditions. Conditions like political will, corporate regulations and safeguards against regulatory capture, fighting disinformation campaigns, and educating people on the harms of inequality, done very well by thinkers like Stiglitz, Varoufakis, McChesney, Chibber, Polanyi, Bernie Sanders, John Kay, Tim Wu, and many others who have considered the effects and are working on solutions. So that when that single spark comes along -- a great leader who can move the masses to rally behind a vision of a better world -- hopefully we will have done enough to move in the correct direction. We are closer than we think probably, if you look at how close the elections of Gore and Sanders were, for example.
But, I should say in the end I am encouraged by anyone who is willing to read and educate themselves on the matter and engage with differing viewpoints. I wouldn't go so far as to say that I am optimistic for the future, but I will do whatever is in my power to create a fighting chance for those who have not yet given up in the face of difficult odds.
interesting idea that wealth is primarily created by tech innovation. Got a good source of reading on this? How would they address a few people concentrating wealth onto themselves?
there was an anti-monetization clause in the contract. you don’t put that there out of an over abundance of caution. they knew exactly FB’s intentions. they maybe didn’t expect it to come home to roost so quickly, but they should have. again, these are smart guys. they just couldn’t get past the billions, plain and simple.
Negotiating that clause in there in the first place is extremely customer/user friendly and I can't believe they were able to do it. I have never heard of this before, especially for such a high profile acquisition...to a known ad company.
I think at some point you could honestly make the decision that you can do a lot more good with $3B than guarding the privacy of the relatively well off from Facebook's ad machine.
Facebook's entire business model is ads. Of course, it was going to a) include advertising or b) add more user info to better target ads in other apps.
Facebook has been lying to us since at least 2007. People were always okay with it because they perceived it as being okay and supportive of the right people and policies.
To be fair acquisition assurances are always temporary at best. They are buying the company for a reason, not to leave it alone forever. I've been a part of two acquisitions over the past decade and most of the devs I know have been in at least one. The assurances are never more than temporary.
This seems less Facebook specific and more "that's simply what happens with all acquisitions".
> To be fair acquisition assurances are always temporary at best. They are buying the company for a reason, not to leave it alone forever. I've been a part of two acquisitions over the past decade and most of the devs I know have been in at least one. The assurances are never more than temporary.
> This seems less Facebook specific and more "that's simply what happens with all acquisitions".
I don't know what was going through their heads but as an outsider with no insider knowledge, I justified this as Facebook making sure nobody else gets hold of Whatsapp's user base. It made sense in my head back then.
Wait a minute... FB had exactly the same business model in 2014 like today. Of course they understand the mechanics of that business model already back then. Shouldn’t they have known better?
Well, yes and no. Back the day, Facebook and Zuckerberg were the shining examples of successful Silicon Valley companies and founders with a good mission.
That Zuckerberg, at the young age, managed to retain control of facebook all the way up to, and beyond, the ICO should have given them pause so. That hints a certain personality (no judgement intended in that assessment). But that is 20/20 hindsight which is always easy.
In 2014? 'The Social Network' came out in 2010, and painted Zuckerberg in a pretty bad light. I don't think he was viewed as a shining example in 2014.
That's not the issue, the issue is whether assurances that were made to them, with or without some legal backing, could be trusted. Companies can be motivated by profit and still be honest.
In corporate America, you always get support as long as things are going well. As soon as things go badly, people look for scapegoats.
I’ve had a manager before who supported everything I was doing but when he was let go, I was left hanging in the wind. I’ve slso had a manager who wouldn’t listen to me (I was the Dev lead), everything failed in just the way I warned it would and I could see he was going to blame me.
Never trust a company - and by extension your manager who represents the company to his reports.
"Warren attributes those problems to a shift, which she says dates back to the 1980s, in the obligations of corporations — from balancing responsibilities to all their stakeholders — including both employees and stock owners — to prioritizing their financial return to shareholders only."
(That's not exactly responsive to your point on maximizing profit, but the body of work on this topic shows that when companies care about long-term return, and about employees and other stakeholders, they aren't solely focused on maximizing short-term profit over all else.)
It’s not about short term vs long term profit. Even when a company is far sighted enough to care about long term profit, every step they take in the short term is in furtherance of that goal.
or in other words, we can thank the stock market and pressure on public companies to focus on quarterly growth at all costs over long-term sustainability and a balanced approach.
The doctrine of what the purpose of business is changed in the 1980s. During the post-WW2 era the prevailing view was that the purpose of business was to "create a customer", and as a result, corporations existed primarily for consumer benefit. Read Drucker for elaboration on this, and it's also still assumed in many economics textbooks of that period.
Starting in 1970, Milton Friedman argued that the sole purpose of a corporation was to increase shareholder value, and all of its other activities - providing jobs, fighting pollution, enhancing social justice, even serving customers - were subservient to that, to be engaged in only if they also helped profits. It took a while for this view to catch on, but following Reagan's election, it gained a lot of popularity in political & legal circles, and was firmly entrenched among business leaders by the mid-80s.
The problem is that we've since discovered a number of ways that corporations can enhance shareholder value (as measured by stock price) without actually benefitting customers, and most of them involve strip-mining value built up over the long term at the expense of the future. And so a significant fraction of the population is just engaged in financial games while they get busy firing everyone who does actual work.
without actually benefitting customers, and most of them involve strip-mining value built up over the long term at the expense of the future
I think of this as the conversion of social capital into financial. The monetisation of things that used to be personal relationships, such as becoming intermediaries what used to be direct interaction.
I don't think anyone "came around" to that sort of thinking. And Milton Freedman was not prescribing a strategy as much as describing a winning strategy. A strategy that has slowly taken over and beat out those organizations that either don't espouse it or have failed to adopt it.
Company is only bound to its owners i.e. shareholders. Employees of the companies have only one way of pushing their agenda: "Either do what we want, or we quit". Companies either are OK with losing those employees and replacing them with others or they change their course to accommodate their employees. If those accommodations piss off the shareholders then the company gets to broker some sort of the compromise or its officers and directors get fired.
The mechanisms can differ as attention-driven businesses have to walk a fine line between revenue maximization and user discontent.
For example, Facebook could've over-induldged on overlay full-screen ads or "watch this video for 30 seconds before proceeding" ads, but they chose not to.
“Serving customers” just gives them an advantage in their ultimate aim - making money.
Any public company that is not majority owned by one person and is not maximizing their profit is a target of a Carl Icahn type of investor, who will buy up enough shares to force them to maximize profits.
>> What year would it be ok to be naive enough to think that any for profit company’s main motivation is not to make as much money possible?
> There is such a thing as business ethics.
> Facebook's complete disregard for them should not be the norm, even if it, sadly, might be more often than not.
It's alarming how businesses' lack of business ethics is getting normalized by comments like the grandparent's. We should require that companies be ethical and condemn them when they aren't. Yes, we'll often be disappointed, just like we're disappointed with the fraction of humanity that becomes criminal, but that doesn't mean we should lower our standards.
Yes and the only way you can “require” anything when doing business is through a written contract with clauses that specify what happens when the contract is breached and the jurisdiction where the breaches will be adjudicated.
IANAL, but my understanding is that this isn't true, and the whole subfield of tort law [1] is about the rights and obligations that firms have even in the absence of a contract. If you steal trade secrets from a competitor, even if you have no contract or business relationship with them, they can still sue you for a very large amount of money and possibly get an injunction against using that stolen information. Similarly for cases of patent/copyright infringement, libel, slander, price-fixing, antitrust, etc.
I suspect that a large class of these "business ethics" violations are actually torts, but the problem with enforcing them is that to do so you a.) need to know what your rights are b.) need to detect violations of them and c.) need to bring a lawsuit against the offender. I remember that on Google's invention disclosure form, one of the questions was "How easy would it be to detect if a competitor was using this invention in their product?", and if the answer was "We'd never know", we wouldn't patent the idea and would keep it as a trade secret instead, on the assumption that if a competitor could use the invention illegally without us knowing about it, they would, and so it was better to deny them knowledge of the invention entirely than to publish and try to enforce unenforceable rights.
When the aggrieved party is a consumer or worker, it's triply difficult, as most consumers a.) aren't aware of their rights b.) have no information about what's going on inside big corporations and c.) don't have money to sue even if they know. Many of the ethical problems in U.S. business today stem from the legal system not being able to scale up to 300M often poorly-informed citizens.
And how well will a handshake - he said/she said agreement hold up in court? How easy is it for one party to “misremember” what was said? There is a reason almost every contract has an “entire agreements clause”
Torts aren't handshake agreements. They're duties that the state decides that all organizations owe to citizens or other organizations, by virtue of existing, but which should be enforced by the party who is actually wronged. (This is what distinguishes them from "crimes", which are forbidden actions that the state actively pursues.)
In this case, Acton's not the aggrieved party. The consumer is - they could argue that Facebook's introduction of advertising and linking of user data harmed them in a way they had not agreed to when they signed up for Whatsapp, or that its purchase violated antitrust law and reduced consumer choice. But good luck enforcing that, at least in the US, where privacy protections are weak and antitrust regulators are asleep. It looks like the EU regulators actually did enforce it, and slapped FB with a $122M fine, but that's peanuts for them.
So while in theory you are correct, in practice, usually whatever punishment is given in a company doesn’t usually amount to enough to change the company and individuals are usually shielded from the consequences of any malfeasance....
> Yes and the only way you can “require” anything when doing business is through a written contract with clauses that specify what happens when the contract is breached and the jurisdiction where the breaches will be adjudicated.
I expect/require that people not steal from me even though I don't have a contract or prior agreement with them, and I also predict that some people won't respect my property.
> You mean, except for criminal law? I don't see how this is in any way equivalent to adding ads to Whatsapp.
It's not against the law to lie to me in most cases, but I still have the same expectation/requirement that people will be honest with me that I do that they won't steal.
How do we as individuals “require” companies to be ethical? At the end of the day, we don’t have the power to enforce ethics. We have to work within the framework of reality and get everything in writing.
Boycott them and don't purchase or use their products.
If you feel strongly about it go further and organize more people to do the same. Try to convince people who don't feel the company is unethical that it is.
But in the end you can't expect because you don't like a company that your feelings on what should happen to come to be.
It's like so many people complaining on Twitter about Twitter not banning voices they don't like. If you don't like Twitter's policies then stop using their product. If enough people agree with you and do this they will change. If you feel it's worth spending your life organizing people to boycott Twitter then spend your life doing that. But the culture of demanding that platforms must adhere to someones arbitrary expectations as if using their platform is a right is ridiculous.
This is exactly what I do with Uber. I don't use it. I use Lyft. This is because I don't consider Uber an ethical company, nor do I particularly like their HR and other management practices.
I don't know very much about Lyft but I have yet to hear anything bad about them which is pretty encouraging.
I started opting for Lyft after the Susan Fowler thing. But I was doing some travel this year and it was shocking to me that Lyft hasn't expanded outside the US as Uber has.
One of the Uber criticisms is that they don't respect local laws when they do such expansions, so maybe that is part of why Lyft might be more cautious. Still, non-US markets and global user bases are much more of a thing as time goes on, so it feels like they're very severely missing out.
Peter Thiel is a major investor and board seat holder in Lyft. If your politics lead you to believe Uber is not an ethical company, that might also give you pause.
It has been the norm in Silicone Valley for many years, unfortunately. It doesn’t mean we shouldn’t be appalled by it anyway, but perhaps just more cynical.
Ascribing ethics or lack of ethics to a business is like ascribing the same traits to a non sentient being.
Even if your manager is ethical and “cares” about the well being of his employees, his manager may not. Even if his manager does the board, the investors/shareholders, etc. probably don’t. The whole purpose of a corporation is that a corporation survives without regards of any one person getting hit by a bus.
I worked for a struggling company a few years ago and management was very honest about the dire straights we were in, I was part of the team who sat in on interviews and did presentations for potential acquirers so I knew what was going on.
I trusted management not to purposefully screw me over. But at the end of the day, if they “guaranteed me” that my check would clear for every hour I worked I wouldn’t have believed them. The only reason I stayed until the bitter end was because our VC backers promised us in writing that we would be payed until we got an official layoff notice.
> Ascribing ethics or lack of ethics to a business is like ascribing the same traits to a non sentient being
This is defeatist. Corporations can be sued in courts, just like people. Their obligations are binding, just like peoples'. There is a little more complexity to signing a deal with a corporation than a natural person because there are multiple sapient interests involved, but that's what lawyers are for.
Protecting users' privacy was never prioritized in the acquisition process. If it had been, the anti-monetization clause would have been stronger.
That's okay. We're talking about billions of dollars. But turning around and playing the good guy will take these men more than simply claiming ignorance.
This is defeatist. Corporations can be sued in courts, just like people. Their obligations are binding, just like peoples'. There is a little more complexity to signing a deal with a corporation than a natural person because there are multiple sapient interests involved, but that's what lawyers are for.
I never said that companies go around breaking legally binding contracts or there is no recourse if they do. I said you shouldn’t trust a handshake deal when doing any business that amounts to real money. Get it in writing.
TL;DR version of which is "Make as much money as possible or become irrelevant note in history"
Edit: Oh, please. Downvotes keep demonstrating a total disconnect between HN responses that require pushing a downvote button and say mass resignation from Google or Facebook or Whatsapp or Well Fargo or Equifax that might trigger a response.
So yes, the only business ethics that is relevant in the real world is "Make as much money as possible".
There's a huge middle ground between being completely irrelevant that you're missing. Plenty of small and medium businesses abide by ethics and make ethical decisions every day. You just don't hear about them because it's not newsworthy that their management tries to do right by the employees or that they pay their bills on time.
They're not noteworthy because they're the norm, not the exception.
I may not like that if I go out in a rain I will get wet, but not acknowledging that as the fact won't keep me dry should I go out in a rain.
They sold the company. By selling the company they have become employees, not founders with control. If they did not like it, they should not have sold. If they are remorseful, they can donate 100% of all the money that they made from a sale of the company as well as all the interest that they have accumulated to some me-so-sorry non-profit. Not 10%. Not 50%. 100%. Otherwise those are just empty words, just like protests of HN crowd working for Google, Facebook, Equifax, etc.: empty words that make them feel better.
sorry, but that is very naive of you 2018 / 2010 / 1990, no business can be trusted to tell the truth if it is not written down in a legally binding way.
They will always do what is in their best interest when it is in their interest to do so
That, and I'm sure they thought they could still stay in control of their product. When it's your first buy-out, there's a lot of delusions about autonomy and power post-acquisition.
Come. On. You don’t get to that kind of valuation with a basically free product without ad targeting. An accelerated vesting clause is not an assurance. If they wanted assurances they could have made it a condition of the deal, ok? They didn’t. Accelerated vesting just means they were telegraphing that they wanted to leave before the shit hit the fan.
Pre-Facebook, WhatsApp's monetization strategy has been to charge users a nominal fee for usage ($1/year). And $1/yr with 1B users doesn't justify the price tag for Facebook. So Facebook wanted to introduce advertising.
PS: I'd be happy to pay them $1/month because a significant part of my communication happens over WhatsApp. The challenge is $1/month is probably too pricey for most of their user base.
FWIW this is from the perspective of and American consumer (I assume, from your comment below where you mention AT&T).
Most WhatsApp users aren't American, and in a lot of places $1 is a more significant price tag. That aside though, some places don't have the infrastructure or trust to even allow any sort of online payment to happen: a lot of people in India don't have credit cards, and being from Mexico myself, I know a lot of people who do don't trust online transactions enough to pay with it online.
Charge me two dollars as a first world American, and give someone else the service for free. Infrastructure can be expensive, but not that expensive. Let's Encrypt, OpenStreetMap [1], and Wikipedia run on donations, and these are core internet properties.
If you think you need tens of millions of dollars annually to run a chat client at scale, no.
Let's encrypt and wikipedia are not-for-profit. If they charge americans $2/month and eastasians $0, then people will be outraged, and they'll find a way to get it for free anyway.
I would ask for proof people would be outraged. Google and Facebook have used their overwhelming first world profits to fund internet ventures in the third world, and no one is outraged over the actions except for the blatant colonialism those actions represent.
They have never offered the same service to an identical identity type (e.g. person/government/corporation/school are all different), but charging for one and not the other.
This is really a reply to "toomuchtodo," but I don't have a reply link under their post. They wrote:
> I would ask for proof people would be outraged. Google and Facebook have used their overwhelming first world profits to fund internet ventures in the third world, and no one is outraged over the actions except for the blatant colonialism the actions represent.
Well, obviously you can't prove a hypothetical, but the "outrage" suggested here isn't about for-profit companies funding charities. It's about being charged even minimal amounts for services. Google and Facebook do not charge users for their core services, so they are not good comparison points.
Odd that you couldn't reply to me, but HN is a strange beast.
Users were paying for Whatsapp [1]. I believe that data point illustrates that users would pay $1/year for a chat service, but this is just an opinion until someone decides to stand up a new service and charges for it.
[1] The evolution of WhatsApp - in rumours and revenues
WhatsApp had dabbled with the subscription revenue model in 2014, which amounted to charging an annual $0.99 membership fee, and earned above $1 billion in the first nine months of instating this fee. But following their $19-billion acquisition by Facebook, they came to revoke these charges, and WhatsApp was a free ride for its one-billion-strong and counting user base again."
> The challenge is $1/month is probably too pricey for most of their user base.
The only reason WhatsApp exists is that international carriers were charging higher fees for text messaging while offering lower data rates, creating an arbitrage opportunity. WhatsApp never took off in the U.S. because U.S. carriers were ahead of the curve in shifting to free texting (thanks to the iPhone popularizing unlimited consumer data plans). So yes, this puts a hard ceiling on what WhatsApp could charge.
And that makes them feigning they thought they could justify a $19B valuation without increasing monetization all the more ridiculous. Of course they knew what would happen. That's why the deal was "if you monetize we vest all our stock and leave and cry out loud all the way to the bank," not "you can't monetize."
Facebook didn't want to die. Large and growing networks are a threat to FB. Buying up Instagram and WhatsApp was probably less expensive than building competitors and out-competing the upstarts.
The challenge is $1/month is probably too pricey for most of their user base.
I was born and raised in a third world country and 99% of my family and friends still live there. Our GDP per capita is around $1,000 (yearly figure). I know people with children who make no more than $150 per month and cannot afford their own apartment. I know people who make even less. I know people who live in villages and probably have a monthly budget of no more than $80-$100.
Yet I have very rarely met people who somehow aren't spending at least $5 per month on their phone bill (buying minutes).
In fact I was very surprised to find that not only nearly everyone has a mobile phone, BUT phone service was more expensive than they are in the US. For example one hour at an internet cafe will set you back 50 cents. Yet everyone has a mobile phone, about half have a smartphone (granted a cheaper version of Android) and people buy internet connection left and right. In America, you walk into any coffee shop, get a free water, a free internet connection and a Thank You.
I say this to say, that WhatsApp could charge $2 per month and most people will happily pay it.
An important point to add to these observations is that WhatsApp made massive inroads with carriers in developing countries to zero-rate their services (unlimited WhatsApp messages as part of a data plan). This is the underreported aspect of the FB acquisition as these arrangements were immediately parlayed into zero-rating for WhatsApp and Facebook. WhatsApp was so far ahead of Facebook in becoming established in these markets that it posed a real threat. And as you said, $1-24 per year paid to WhatsApp would be only a fraction of what even the poorest mobile phone users pay for their plans.
This is an invalid comparison. WhatsApp is an OTT messaging service. You're comparing it to carrier internet and voice service.
It would be more valid to compare it to carrier text messaging fees, which was the arbitrage opportunity they exploited. But that opportunity is mostly gone now that everyone has smartphones. If WhatsApp charged $2/month they would face the same challenge from upstart apps that carriers faced from WhatsApp.
The $1/yr thing was BS. The app never actually took you to a payment screen; I think it was "free for 1 year, $1/yr afterwards". The only time I have ever paid for Whatsapp was in the Blackberry App Store back in 2009, when it cost $3.
If you think that even the friction alone of charging $1/yr isn't enough to shove the vast majority of users off the app, you haven't been paying attention to consumer expectations.
I agree that $1/yr would shove off majority of users off the app. That said, I think WhatsApp could get to revenues of $1-3B per year because of the following:
* I pay $60/mo for my AT&T line. I do the majority of my communication over WhatsApp. In that sense, WhatsApp adds more value to my life than AT&T. There are a group of users who'd be willing to pay more for that value.
* For most users, WhatsApp is an integral part of how they communicate with friends, family, doctors, coworkers, etc. As a consumer, it isn't just an "app" but an integral part of their communication flow.
* WhatsApp is respected by international telcos. I know at least for the telcos in my home country that they'd be happy to charge for WhatsApp subscription as part of their packages.
I think the primary problem was that even if WhatsApp could monetize $1-3/yr per user on average, it still wouldn't have met FB's revenue expectations.
WhatsApp relies on network effects to be successful. If you get less than 100% of users continuing to pay and use the product then the utility goes down; the paid product is actually worse than the free version.
I honestly believe the friction of paying any non-zero amount at all for a messenger app is more than what 80%+ of users would be willing to bear psychologically. They would almost certainly just migrate to a different app. That's also where WhatsApp's group emphasis becomes a huge drawback - groups would tend to migrate together, making it easier and quicker for the whole network to unravel.
No they were not. This is a complete falsehood. They sold the company well before they could roll out their monetization plan widely enough for it to impact user retention. They were also much smaller at the time.
agree. This is just such complete bullshit. If you don't agree with someone's ethics or business practices, don't take 22 billion dollars from them. If you do take 22 billion, say thank you and stop acting like a 10 year old.
that’s a bit of silly wordsmithing. you are technically right in the general case, but in this case we can indeed infer bad intentions. one doesn’t need to imagine good or bad intentions, one can simply look at the facts in the ground (even at the time, not later in hindsight).
he was preying on people’s naivete and admitted as much.
The movie "The Social Network" came out in 2010 for goodness sake. It was already mainstream knowledge among non-tech people in 2010, let alone successful tech billionaires in 2014, that Facebook was an organization run by sociopaths.
I'm sure Acton and Koum told themselves they were also keeping the power to be in control. I'm sure they went into it thinking they could avoid this end. The brain is a powerful rationalizer when it sees generational wealth within reach.
The indignant tone of the comments here make me laugh. There are very few things I can imagine readers of HN not doing for a billion dollars. People may say otherwise, but until they've been tested I choose not to believe them.
Yeah seriously. I'd love for a trained philosopher to analyze this scenario. Surely letting WhatsApp become crappy would be worth a nice 9- or 8-figure donation to charity. I would feel like a selfish jerk for rejecting that kind of money so that, what, people see fewer ads? Talk about what a zeroth world problem ads are, good lord.
> The indignant tone of the comments here make me laugh.
Yeah, the level of indignation and self-righteousness in the comments on HN (and not just in this thread) seems to have gotten worse lately. Maybe time for me to take a break from HN for a bit...
I think it is good that this community praises founders who do the right thing and condemns those who do the wrong thing, even though most of us will never play for such high stakes.
There is no such thing as a hivemind here, just the consensus that it is wrong to sell your company to an entity that puts profit above people's privacy and wellbeing.
I've been seeing the same thing...not just in HN, but across tech.
My theory is there's a lot of resentment of the successful. We're seeing a new generation of engineers enter the workforce that never got to participate in the previous booms, and it's not as easy to make it big as it used to be.
> it's not as easy to make it big as it used to be
What? It's so much easier than it used to be. Between low interest rates, QE policies and the latest corporate tax cuts, equity markets are booming and it's easier than ever to get bought. And the actual process of building a company is also easier. Between accelerators like YC and Cloud providers, the path from idea to getting acquired is shorter than it's ever been. You just have to adjust the goal posts a bit. It's may be harder now to IPO and become and independent company with the outsized influence of one of the FANGs, but achieving generational wealth by being acquired by one of those companies is routinely done in just a few years.
Not saying you're not mostly right, but there is the case of Jean-Baptiste Kempf, maintainer of VLC, who apparently turned down tens of millions to put ads into VLC. (I suppose that is two orders of magnitude smaller than a billion.)
And if he chose to criticize the WhatsApp founders, it would carry a lot of weight with me. I didn't say altruism doesn't exist...I just don't believe it's in this comment thread. :)
He is an exception. I guess 99% (or maybe more) of the people in his situation would've taken the money, and they'd probably be doing right for themselves and their families. Ethics is always a nuanced topic.
I am not fully familiar with the whole story, but given the different paths Acton and Koum have taken (activism vs collecting cars and chilling on a boat) i wouldn't be surprised that they had a disagreement about whether to sell and one of them prefer to back down. who knows, maybe he even preferred to keep Koum's friendship. Their very different backgrounds also point towards different motivations in a situation like this.
I don't know if I'm being silly cos I don't know how these things work, but I'm also surprised nobody has talked about this possibility
It’s pretty likely that Acton weighed what he could do with the money when it came to pursuing his values post-Facebook. His role in co-founding the Signal foundation and substantial donation to its existence is good evidence of this. A small portion of his fortune could pay for Signal to be free and continue to improve for decades if managed well.
It is a walled garden network that demands you tie your phone number to your account making anonymity very hard. Moxie also has an obsession with keeping the network centralized, going so far as to threaten to campaign against attempts to release independently verified and signed clients via projects like F-Droid.
There is not even a path for users that opt out of Google Play Services on Android to install official builds without turning on "enable untrusted sources" and thus opening yourself up to Man In The Disk style attacks.
Signal is modeled very similar to whatsapp where you have to trust a central company to not sell your metadata, and central employees to not backdoor you under coercion.
I don't know what their real agenda is but it is not anonymous encrypted and decentralized communication.
Instead I would suggest looking at Matrix.org/Riot.im which are building anonymous, federated, end to end encrypted messaging where you can use any client that adheres to their published specifications.
I feel like I'm coming across more of these "exit, then atone" profiles and none of them seem to have any teeth. They read like self-help articles for the ultra-rich: "Broken moral compass keeping you up at night? Try driving a Honda Odyssey."
I get it; you took the money. I'd sure as hell take the money. One anecdote about sniping at Sheryl Sandberg is washed away by this milquetoast sentiment:
“It was like, okay, well, you want to do these things I don’t want to do,” Acton says. “It’s better if I get out of your way. And I did.”
The environmental impact, sure, but there's also a "keeping up with the Joneses" factor. If people don't flaunt their status, other people won't feel as pressured to either.
I once heard a very wealthy guy complain that "everyone these days wears a Rolex", so he needs to buy something fancier. Well, once every super wealthy person goes out and buys something fancier, then the less wealthy people will want that and the effect trickles down. The fact is that conspicuous consumption is a problem for our society in that it leads people to buy things that they can't afford. By driving a minivan, Brian Acton isn't contributing to that problem as much and I commend him for it.
To be honest, no matter how much money I had, I'd still buy my Odyssey again. I looked at the Tesla X. They even let me drive one for a day. It was great for me, the driver. It was terrible for my passengers. It's uncomfortable and has no amenities.
I checked with Mercedes and BMW and Lexus too. All nice cars, but none as nice as the Honda.
If you regularly haul around 2 kids and 4 adults like I do, honestly, the Odyssey is the best thing you can get.
Luxury goods cost money that could otherwise be used to help the vulnerable and suffering.
Of course there's no point foregoing the fancy car if you're going to spend 100% of your money on yourself anyway. But even when it's not a clear, direct tradeoff -- 'hmm, should I buy the Ferrari or give $100k to charity?' -- I think most people give some of their money away, and the proportion depends on how financially comfortable they feel. So stretching your budget to buy the best attainable toy/status symbol probably has a real negative effect, relative to buying one of the (perfectly good) cheaper options, or keeping your existing car for a few more years.
Acton is being incredibly disingenuous and it is disappointing. When you sell your company to another for $19B, you should surely know that the expectations for monetization will be very heavy indeed. Well beyond Acton's suggested metered-user model.
I'm certainly no great fan of Facebook, but anyone who thinks that they deserve to use a service free of charge and also avoid advertising is extremely entitled and disconnected from reality. There is no free lunch.
None of this is to excuse FB's bad behavior. The fact that they claimed they wouldn't attempt to link accounts but had teams elsewhere in FB working on that very task is yet another example of the true nature of that company and its highest ranking people.
> Facebook could have tried innovating with new types of business models and set an example.
Such as? This kind of handwavy "they could have invented something else that no one else has managed to think of" ignores the possibility that perhaps that other business model doesn't exist.
Of course, they could have charged as Acton suggested, but there is no way that model would have supported their $19B purchase price.
I mean, I don't believe that in 2018, we have tried every possible business model in existence. What if I could pay $50 a year to be excluded from their advertising and tracking across the internet? $100? $10/mo? There are absolutely alternative ways of asking for payment for their service, without necessarily compromising their main revenue stream. Will they work? Who knows, because they aren't even bothering to try!
EDIT: And as much as this particular conversation is throwing Facebook under the bus, I feel this holds just as true for Google and the rest of our industry as a whole with a few notable exceptions.
> [...] anyone who thinks that they deserve to use a service free of charge and also avoid advertising is extremely entitled and disconnected from reality. There is no free lunch.
We are using Hacker News, free of charge, without advertising. Or for a bigger example, most Wikipedia users have never donated and yet use the service with zero advertising. Or there's Signal, as mentioned in the article, and countless other examples.
Hacker News is subsidized by perhaps the most successful venture capital firm of all time. Wikipedia routinely raises lots and lots of money via donation. Signal is funded by a multi-billionaire.
There is never a free lunch. Employees must be compensated, capital equipment must be bought/rented. The revenue has to come from somewhere.
Neither of Hacker News nor Wikipedia nor Signal was purchased to the tune of $19B. So who set that price? Let me assure you, Facebook would have gladly paid less. And, of course, Facebook bought WhatsApp with the intention of turning a profit. The rest follows logically.
I want to tell a story about Whatsapp that is unrelated to that, but incidental, and the reason why this seems too much to me. I don't like the company even if I use Whatsapp every days since the start, because when it started to spread in Europe, at the start of the iPhone and Apple store era, Whatsapp was the worst thing ever in the app store in terms of how strongly they advertised their platform, almost in a spammy way, everywhere. Moreover the application was pure garbage. It was not just unencrypted, but the IMEI of the phone hashed with the phone number, or something like that, was used to authenticate to the service. There was zero attempt at privacy. Later when they made big money they fixed it, but still... Fast forward the acquisition, there was another element I did not like: they really did a big noise about how scalable was Whatsapp 'cause it was FreeBSD + Erlang based, one thing that I believe was not honest. Whatsapp was very scalable fundamentally because they just acted as a bridge without storing anything. The backends were probably also decently designed, but not because FreeBSD + Erlang, you could do it differently with the same results. Moreover many times here in Europe where it is massively used, during like xmas or at the new year party time, it goes down, so... like everybody else on earth. And now that story. I never liked the company vibe, and I think he should stop with this Facebook story, because you are the actions you make: don't trust the big social network model? Well, develop your company and find a business model you like. Now it's late to cray. Besides I don't think Facebook is doing anything terrible with Whatsapp.
> The company is also set to charge businesses for messages they receive from potential customers via the WhatsApp platform — of between a half a penny and 9 cents, depending on the country.
Didn't knew this and takes back to the outrageous SMS pricing of 10 cents per SMS.
I as a consumer can change easily but it's sad to see that business will have to deal with this crap.
If Skype hadn’t been a thing I’d agree, but it was.
The fact that we aren’t using peer-to-peer encryption in our message apps today is solely because companies want to charge you money for sending messages.
Because Skype had the capability to operate as a decentralized encrypted messaging app, and now 10-15 years later, there isn’t an app like that. Not because it’s not possible but because giant tech companies have become the equivalent of fossil fuel companies, killing innovation by buying it and absorbing it, altering it or shutting it down.
Do you remember how skype worked in 2011? You could send messages anytime, but they would only be delivered if you and your conversation partner were both online at the same time. If you used two computers, the conversation history would sync up if both computers were online simultaneously -- or you would sometimes get it from your conversation partners if they were online.
That's fine in the world of desktops with always on connectivity (often not even NATed), but it doesn't work on iPhones were when your app isn't on screen, it isn't running (they have a limited amount of background execution these days), and anyway connectivity is spotty.
so offline messaging was such a difficult thing to solve without selling? I doubt it. Skype hasn't improved much, not only because MS is not doing its best, but also ISPs typically throttle that.
Centralization was more or less required to do offline messaging. Not so much the selling bit (but note that Skype had already been sold twice before Microsoft bought it in 2011). I agree Microsoft hasn't done a good job with it, though.
You could cache encrypted messages on a P2P network until the offline party comes online. There is no money in that, but from a technical PoV it is very doable.
Systems like the lightning network on Bitcoin or Raiden on Ethereum are working on something similar for outsourced channel monitoring (aka watchtowers).
You could, but in order to make that reliable, you have to use a lot of other people's space storing other people's messages... It's a lot simpler to keep it reliable if the service owner owns this (this is also part of the reason the Skype supernodes moved to be company hosted)
How much replication do you need? 10x? 20x? If these are text messages that's probably less than 10KB per person per week of being offline. Delete the messages if the recipient hasn't come online in a week.
I believe you could build a highly reliable P2P offline texting app without any centralized services. I'm not sure anyone would want it and it seems difficult to monetize, but it is doable.
I agree that once you start adding features like images and videos that it tips the balance more toward centralization.
> Or only allow sending text when the other person is offline?
I think that is an excellent idea.
Also I'd propose a vector-based image format with a maximum file size and fixed resolution (for online and offline messages). That way you could send drawings and diagrams without increasing the data requirements. It would also give the app a unique look and feel and would make it more difficult but not impossible for people to send hideous photographic content.
The real question to me is how many people are willing to have less features for more decentralization. I suspect that is a small number of users.
Now, this would be a thing I'd get excited about - if a non-profit company gets behind developing it. It was a given that whoever bought Skype would milk it for the money.
Imagine an App on every platform/device that forms a mesh amongst its users and communicates short messages in a P2P way. Perhaps some simple state could be stored in some special nodes that aid in co-ordination. The whole thing may come with a Wikipedia like openness goal. I'd donate generously for such a cause.
>The fact that we aren’t using peer-to-peer encryption in our message apps today is solely because companies want to charge you money for sending messages.
Encryption export laws. And most importantly, pressures by three lettered agencies to target individual bad actors.
Before the MS acquisition Skype was not completely free. It had subscriptions and you could buy credit to reach the PSTN, however it was not profitable. Money would eventually run out, as it happens to every company that keeps an unsustainable product alive.
Of course we as consumers would love to have everything free, but someone is footing the bill.
They don't have an offering for businesses other than having a platform with a huge amount of customers and potential customers. Businesses have been trying to use it to explore the potential, but I'm sure they'd be happy to pay for something that can scale and be used by multiple users, like in a contact center.
The 10 cents isn't for the SMS. The 10 cents is for providing a lead channel, and either now or later, business level features around that lead channel.
Intercom's pricing probably works out to something comparable for the average SMB. If the price is too high relative to the value then businesses won't use it and they'll have to drop the price.
His first point being that Zuckerberg defended Whatsapp's request for a spacious, quiet place to work is bizarre to me. That doesn't seem like a huge concession to grant a small company after purchasing them for ~$20B.
>"Don’t be passive-aggressive about it. And by the way the paid messaging that WhatsApp is rolling out now sounds pretty similar to metered messaging from my point of view..."
Takes a certain type of person to add a passive aggressive dig after telling someone not to be passive aggressive.
Passive-aggressiveness implies avoiding direct conflict. The author of this post refers to Acton not speaking up or making a good argument one way or the other, letting things evolve while resisting passively.
Also, the author is being very direct about what he thinks of Acton's behavior, he's not being passive-aggressive.
Now I find myself in the unfortunate position of defending Facebook, a site I barely use and whose founder does not to me represent the best of Silicon Valley. He took their money. He should just shut up. There was never any question about what Facebook was dealing with its data. Never. They have always been explicit about it in their user agreement. He didn’t seem to mind when he took billions from them. I have an old-fashioned sense of ethics and cannot understand how someone would like that would bad-mouth the public company he benefited so richly from, when he knew all along what they were doing. There are no heroes in this story.
I think like most people who sell their business then see it multiply in size and value afterwards, hindsight is a bitch - he regrets it. He was tortured for years thinking about 'what if' he hadn't sold the company and been in control of its destiny. Rather than appreciating the position he's in, which is probably what he should be doing.
I get the frustration of seeing your pride and joy used in ways that you hoped to avoid. But he likely would have retained more control of WhatsApp if he stuck around and played ball. Now he has some money, zero control, and he has absolutely scorched the earth for his co-founder or anyone else who wants to minimize ads or find alternate monetization options.
The guy is worth $6 billion according to Wikipedia, he and his cofounder will probably be ok. Maybe we'll see something good come out of this with his involvement in Signal?
I can't help but go back to Mark Zuckerberg's letter when Facebook was preparing to IPO:
"... we don’t build services to make money; we make money to build better services.
"And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits." [1]
I mean, there was no way he was going to drop $22 billion dollars on something and not get a return. But I can't help but notice how the article depicts him as someone who is thinking more strategically, contractually, and businesslike (i.e. profit-driven) than someone who would write something like the quote above. Whatever he was then, he seems to have taken a step away from it and become... a CEO.
>I mean, there was no way he was going to drop $22 billion dollars on something and not get a return.
There's plenty of valid business reasons to spend money on ventures that aren't "net present value of cash flow projections exceed costs". There can be indirect effects like maintaining a moat - buying WhatsApp can be worthwhile simply to ensure that other companies can't use it to compete with Facebook's core business. Or there can be real option considerations. Or it can drive down the price of the complements of your core product.
Definitely, great point. For Facebook + WhatsApp, I'd bet that this is a case of Mark having a giant ad revenue hammer, and everything else that's corralling eyeballs is inevitably going to be a nail.
If you think about it, there was no other way this could have played out. Acton (and maybe Koum) are privacy idealists, but could never have gone to the next level of philanthropy via massive wealth just by organic Whatsapp growth and revenue.
They needed the FB acquisition to supercharge their wallets, needed the pound of flesh to be demanded for the price that was paid in order to revisit their original mission, and now we're seeing Acton at least refocus on easy-to-use encrypted communications via Signal and potentially other platforms. The FB money has allowed for potentially more investments in the privacy tools sphere, if Acton continues his work in that area.
Whatsapp is a massively dominant messaging service, but the drive for privacy amongst consumers will continue to increase. It'll be interesting to see how we all communicate with the next evolution of all these apps in 10 years.
On one hand I wonder if money should really be apportioned to people who’d sell their user base to FB, like, will they make the best decisions down the road? Another part of me thinks well, better the money in a good person’s hands than FB’s. But you have to assume Acton et al are truly better people than FB, and still the user base is offered up as a sacrifice to that. Doesn’t feel great to me.
i have little sympathy for such actors. i’ve known people who got rich on stock options in the ‘00s and then fled california while decrying the rat race. this is the same thing.
if you really mean it, donate all the money to charity, an ed foundation, or some such. i’ll even forgive you for keeping 10mm for yourself. otherwise, cry me a river.
> Brian Acton, who left Facebook a year ago — before going on to publicly bite the hand that fed him, by voicing support for the #DeleteFacebook movement (and donating $50M to alternative encrypted messaging app, Signal)
And:
> And for leaving a cool ~$850M in unvested stock on the table by not sticking it out a few more months inside Zuckerberg’s mothership, as co-founder Jan Koum did.
Sounds like this actor may in fact be worthy of a little sympathy.
Is it rational though 850 mil. could literally be used to save few thousands of lives if one was so inclined. While FB is evil by HN standards it's pretty meh on global scale of things.
I would bet at least 60% of population works for something more evil than FB. Yes they are evil but not in a sense lets start a war and kill few 100K innocent people because we need to run pipelines evil.
I think you need a lot more clarity on how the world's workforce is structured. You are forgetting that the vast majority of the world is doing brick and mortar, making your clothes, planting your crops, etc.
The dissemination of wrong information, the contribution to individualism, and the obvious (blatant) disregard for the world population's privacy is really up there on the charts.
You left out the part where he expected and tried to get the $850M but FB’s lawyers pushed back and he settled after burning bridges. $50M is 0.7% of his net worth last I checked (maybe it’s changed).
Look, I’m glad they’re not still at Facebook but this is hypocritical posturing. They’re not giving the money back. They’re crying all the way to the bank.
At the level of wealth this guy has, allocating 0.7% to something is a notable action. Once you're at the level he is at your capital allocation is not about accruing material goods. Material goods are just a rounding error, just buy a few houses and park a few mil in a fixed income fund and you are set for material wealth for life. That leaves you several hundred million to deploy for influence and power. The opportunity cost of moving $50M around is huge.
$olid insight, friend. You're post is the only one that mentions the word hypocrisy. $uppose FB had hired him when he applied for a job. Now suppose he's a mid level manager with a net wealth of 10-20m instead of the co-founder of a messaging app worth over 1b. I seriously doubt he would have all of these ethical qualm$ and be leaving the company.
Sorry I meant gave up after burning bridges. Their plan was always to bail before monetization kicked in and be able to say they had nothing to do with it. But you don't get a $19B valuation from Facebook for a text messaging arbitrage app without being fully aware of where that money will come from. That's why they didn't forbid it, only required accelerated vesting.
Indeed, or at least certainly more worthy than a writer (clearly doesn't sound like a real journalist) that drops lines like "going on to publicly bite the hand that fed him"
You're absolutely correct despite the downvotes. Of course everyone is allowed to voice their opinion about privacy, but people with power or money should put their money (or power) where their mouth is: fund an alternative. Also, "used him" doesn't mean it was not consensual in this case.
One does not "use" the CEO (or whatever his title was) of a billion dollar company. Either it was part of his duty and responsibility to the company or he willingly cooperated with deceiving a regulator.
To portray it otherwise is just a spin.
At least he admits to “At the end of the day, I sold my company. I am a sellout. I acknowledge that,”. I'm sure it's much easy to be remorseful with a few billion dollars in the bank.
"“I called her out one time,” says Acton, who sensed there might be greed at play. “I was like, ‘No, you don’t mean that it won’t scale. You mean it won’t make as much money as . . . ,’ and she kind of hemmed and hawed a little. And we moved on. I think I made my point. . . . They are businesspeople, they are good businesspeople. They just represent a set of business practices, principles and ethics, and policies that I don’t necessarily agree with.”"
Would have loved to be a fly on the wall in that room!
It really does not scale. Charging users after a certain threshold of messages is a silly idea. Can you imagine if Facebook charged after a certain number of status updates and photos shared? It's not that it doesn't make as much money, it's that people would have quickly jumped ship.
He tried to do what he thought was right and lost. Then tried to maximize the cash per his agreement and lost. So he did the math and realized that he could spend a chunk of his life most likely either fighting in court and/or being made miserable in exchange for a sum of money he absolutely didn't need. I think he made the right call given his situation. Though this should be (yet another) cautionary tale: when you sell your company, the deal is that you are giving up control in exchange for cash/stock. You can generally stand either on the moral high ground or a mound of cash, rarely can you do both.
Depends on how much good that would do, and how much harm he did to get it. But the_duke suggested donating all of the extra money. That's not having your cake and eating it -- where's the selfish benefit?
But it's relative, he already cashed out $3B by this pont?
The way I see it he evaluated harm to his health and well-being from doing something he didn't want vs vesting tail of his grant and chose a sane option, because he already vested enough. Similar stories on smaller scale happen all the time with VPs and directors after re-orgs.
I think that's a reasonable position in response from an employee trying to "activate a clause written into their contract to allow them to immediately get all their stock if the company began “implementing monetization initiatives” without their consent" .
Now whether or not he was in the right to demand it, when actually doing so I doubt anyone expected to have a working relationship after that.
In a vacuum, perhaps, but I think there's more to it than that.
Another account yesterday mentioned plans to put Kevin Systrom under a different manager that would have given him "less access to Zuckerberg." Earlier accounts described them as friendly, always seen together, etc.
It seems like Facebook is a company where access to the CEO is so tightly controlled that it's basically used as a political weapon.
> access to the CEO is so tightly controlled that it's basically used as a political weapon
This is true at almost any organization of scale. Access to top decision makers must be restricted. The people who make decisions about the restrictions, therefore, gain influence through that process. The power can be used properly or improperly. In this case, it appears to have been used properly: there was no further discussion on the matter, and the employee had shown themselves to be out of line with the CEO's strategy.
But it was Mark & Co that went predatory and started implementing monetization initiatives, right? It still paints Mark in bad light, it's not like Koum & Co weren't entitled to that part of the contract and instead were the primary violators?
People change; perhaps they had previously discovered terms in which monetization would be agreeable. Then when that monetization happened, the other party had a change of heart and no longer consented. If done in bad faith I could see that annoying someone.
> perhaps they had previously discovered terms in which monetization would be agreeable.
If that was the case, I doubt it would have been explicitly and legally formalized in the contract as disallowed without a payout.
If two parties decide that a clause of a contract doesn't need to be enforced, you rewrite the contract. Anything else is just stupid, as it allows the person likely to gain to say "well, I didn't really mean that...".
If you've formalized something in a legally binding contract, be prepared to follow through on it. Full stop.
But he must have signed of on the contract, so he would know it could happen? Why act all offended by it? Especially since Facebook's agenda seem pretty clear-cut: put ads into WhatsApp
That's brutal and manichean, you can organize a soft transition, you can organize a change of role at the same company, you can try to convince the person to do something else than resigning, you can even discuss with the person what they want to do after they are gone and see if you can help.
Engaging instead of sending the thugs to empty the cubicle.
It could also be empathizing with an angry person.
For example, an employee is rude to a client.
You call the client to do damage control, because you have a personal relationship, the client continues to be furious.
You say "Look, I know you're angry and I know this is probably the last time you'll ever talk to me, but if I can say one last thing, it will be that we have always tried to <insert conciliatory remainder of conversation>"
I don't know if that is always arrogance or entitlement, is it?
This paints a clear picture of the opposite. An employee saying "this is probably the last time you’ll ever talk to me" to their employer is an arrogant and entitled behavior on behalf of the employee.
What?! Zuck dropped a cool $21B on the app - I believe he's entitled to expect a return on investment without being bullied, using a public business model everyone knew about. Facebook isn't a non profit, and zuck is actually accountable to investors
What is less well-known is the elite institutions which groomed him tend to not do much of anything about the fact that they are sometimes, not always, sending these types of Stanford-Prison-Superiority-Complex personalities out into the world.
Mark Zuckerberg seems to be the master of putting things in contracts that play out in his favor.
The article says they wanted a clause that granted them approval over monetization strategies. So Zuckerberg gave them some version that he knew had no teeth in order to close the acquisition. But he got exactly what he wanted in the end, without any real compromise.
This falling out with Acton and Joum seem like just another case in the long line of bad relationships: Saverin, and perhaps the Winklessvoss twins, although that "business" relationship was for the sole purpose of ripping them off.
Alternative reading: "Mark and Co. don't think twice about breaking laws or contracts, as long as any fines end up being less than the money they stand to make."
If I understand correctly, Zuckerberg forced Acton to hold onto his Facebook shares - and the value of those shares then doubled in a three-year period. Surely that must mollify Acton's animosity somewhat.
It reminds me of the scene in The Big Short where at one point the investors a clamoring to withdraw their money from Michael Burry's fund. They hate him and call him names, but he refuses to let them withdraw. Later when he pays out a huge profit he emails them saying, "You're welcome".
> At the end of the day, I sold my company. I am a sellout. I acknowledge that
I think he's acknowledging that his company was un-monetizable and selling was obviously the best thing they could do. And 10 years later, it remains unmonetizable, that's sad.
Monetization is really hard. The ‘90s was filled with the wreckage of companies that couldn’t get it right, with debris spreading out into the early ‘00s. The ad monetization model is one way to do it, and it can be rolled out to a wide variety of products, but it is unlikely to be the only model.
Business is hard, and it can take a long time and many failures to be truly innovative. I’m an engineer, but I’m a little sad that so few people with strong business backgrounds are trying new things. Maybe in another decade or two.
I guess the lesson here is to stop making a business out of burning venture capital, and start with a real business plan. There are plenty out that are building things people are willing to pay for. WhatsApp is super popular, because you're giving away the worlds 100th iteration of a chat client for free.
> I think he's acknowledging that his company was un-monetizable and selling was obviously the best thing they could do
That's wrong - WhatsApp was monetized - IIRC, they had 200 million users (and growing) and a staff complement of 50[1]. They could have been easily profitable even if a fraction of their users then paid $1/year, or charged Businesses or bots.
That would have stopped working in a few years: nowadays lot of different people stopped using WhatsApp almost entirely using Facebook Messanger / Telegram / etc. 1$/year is just too low-proft and too risky
I find the article interesting from a cryptographic perspective--specifically have they implemented searchable encryption or such a "encrypted environment" where they able to capture more than meta-data.
These quotes specifically:
The challenge was WhatsApp’s watertight end-to-end encryption, which stopped both WhatsApp and Facebook from reading messages. While Facebook didn’t plan to break the encryption, Acton says, its managers did question and “probe” ways to offer businesses analytical insights on WhatsApp users in an encrypted environment.
...
When Sandberg, Facebook’s COO, was asked by U.S. lawmakers in early September if WhatsApp still used end-to-end encryption, she avoided a straight yes or no, saying, “We are strong believers in encryption.” A WhatsApp spokesperson confirmed that WhatsApp would begin placing ads in its Status feature next year, but added that even as more businesses start chatting to people on the platform, “messages will remain end-to-end encrypted. There are no plan
They are not that interesting. You have no way to verify if their statements about encryption are true, so you'd be nuts to bet much on assuming they are. WhatsApp being sold to an advertising company is just one fine example of why it's nuts.
In fact given the recent bill's introduced into the Australian parliament, it's irrelevant if they are true. The bill allows the government to demand they produce a version of WhatsApp with a bug that sends a copy of all data receives somewhere, and also allows them to demand they download that app via the automatic security patch mechanism. So unless there is a way to verify what software you have isn't bugged you have to assume even if it isn't now, it could well be in the future.
There are ways out of this mess, but none of them are based on taking someones word for it. Yet the "it's secure because that's what it says on the box" seems to be the most common security model people adopt. It's so clearly wrong I sometimes think I'd be less perplexed if most of the world's population started insisting water wasn't wet.
Actually a fellow on HN the other day demonstrated that you could decompile their APK and inspect the code, so you can make a pretty solid attempt to verify product statements if you have the skill and the time.
Also, I think we're cross talking about their statements--I can't divine anything specific from what they say, but their answers (esp. Sandbergs non-answer) seem supportive of other things I've seen claiming the encryption they're using is leaking business analytical information to FB on purpose (effectively undermining the lay understanding of end-end encryption).
So... Basically he cashed out billions. That is ridiculous amount of money. Now he said "no" to $850 millions for moral reasons, and the moral action here is mostly that he won't work for facebook any more.
For me this sounds quite ridiculous. He already cashed out as they sold the unprofitable service for ridiculous amount of money. Facebook has to generate profit for shareholders so they have to monetize it somehow. It is quite easy for him to say "yeah I'm morally superior, thanks for the money but I don't want the product to be profitable that way you know, now when you have paid me..."
> “At the end of the day, I sold my company,” Acton says. “I sold my users’ privacy to a larger benefit. I made a choice and a compromise. And I live with that every day.”
Seems like he's aware but Forbes is desperately trying to spin it differently.
Are Matrix clients reliable and fast enough to use them? I am looking forwards to install them to my family but last time I tried they were a little bit unresponsive.
I switched from WhatsApp to Riot, connecting to the public matrix.org server, and it's working well for me. The app is pretty nice. It looks like any other modern chat app.
The end-to-end encryption had some issues earlier (last year?), losing my encryption keys and making all messages in the conversation unreadable, but it seems to be working well in the latest version. It still warns you that encryption is experimental when you enable it, though.
Out of my 356 contacts only 46 are on Telegram and among them 11 were seen recently (let's assume they still have the app). In last few weeks only 8 of them replied to my messages or read them so I'd say only 8 are actively using it (I checked with the remaining :P).
On Signal, there are just 13 and only 3 replied to me in last few weeks. All of those 3 were coerced by me into installing it on their phones after I deleted my WhatsApp account recently. So basically none of my contacts was actively using Signal (the remaining 10 didn't even receive the messages).
No one was on Matrix/Riot and no one installed it even after my repeated evangelistic encouragements and promise of full time tech support. Can't blame them as I myself find it difficult to use the service/app for any non-Slack/non-IRC kinda usage i.e person to person messaging.
One day I checked just for testing and more people are on https://hike.in than on Telegram from my contact book. That was surprising. Didn't try any further and uninstalled it.
Almost everyone was on WhatsApp and almost everyone was on Fb Messenger too when I used them.
My contact book is very generic - obviously not the very tech savvy specific circle but a decent mix professions and backgrounds. Also, I have keep my contact book regularly trimmed and limited otherwise it would have been a lot more than 356.
So, if I have to choose WhatsApp's replacement based on this criteria then there's really no other choice sadly :( Though I do have some hopes from Acton's $50 million.
PS. I had checked one day and around 20 are on Apple devices (shows iMessage option for them but a lot of them might be on macOS) and except 3-4 of them none use iMessage at all.
>One day I checked just for testing and more people are on https://hike.in than on Telegram from my contact book. That was surprising. Didn't try any further and uninstalled it.
This reminds me of Viber, a local success in the Eastern Europe.
signal it's obvious choice, but also Skype has now optional Signal encryption plus they removed clutter so if you want actual users it's not that bad option
> Acton said he tried to push Facebook towards an alternative, less privacy hostile business model for WhatsApp — suggesting a metered-user model such as by charging a tenth of a penny after a certain large number of free messages were used up.
> But that “very simple business” idea was rejected outright by Facebook COO Sheryl Sandberg, who he said told him “it won’t scale”.
> “I was like, ‘No, you don’t mean that it won’t scale. You mean it won’t make as much money as…,’
This doesn't scale because people would ditch WhatsApp in favour of a messaging app that didn't restrict the amount of messages you can send behind a paywall.
I know that hating Facebook is in vogue, but frankly with that line of thinking he sounds like would have made poor business/product decisions.
I'd say it's a big deal because $850M donated to a worthy cause (e.g., GiveWell) could have made a big difference in the world. I've suffered far more for far less.
If you're going to call him out for not staying at FB long enough to get the $850M to donate it somewhere, why not also call him out for not donating most of his $3B fortune? Surely he could scrape by on even a paltry $1B.
What's the difference from telling someone to stick it out long enough to vest more stock versus telling him to just donate some portion of his already vast fortune?
It would be good if he did either or both of those things. The original question was why giving up $850,000,000 is a big deal when you're already super-rich. The answer is that, even if it won't affect your living standards, it's still worth $850,000,000 to the people you could use it to help.
I'm so sick of the self-righteous moralizing and bullshit by the tech elites and the news companies that help push that narrative.
Brian Acton didn't create whatsapp to "do good". Facebook wasn't created to "do good". Google wasn't formed to "do good". People create companies to make money. Why is this so hard for people to understand?
The guy spent 3 years creating a silly messaging app and growing a userbase and sold it for $20 billion. It's like winning the lottery. Maybe he feels guilty. But stop with the patting of one's back and pretending to fallen saints.
He knew well enough what selling whatsapp ( a company that didn't make a single penny ) to facebook for $20 billion meant. Monetization. I would have also sold a shitty messaging app I worked on for 3 years to FB for $20 billion. But I wouldn't go around pretending I was a saint who got hoodwinked afterwards.
Besides, even if the guy didn't sell to FB, he would have had to monetize and sellout eventually because he had venture capitalists to satisfy.
These slimeballs are trying to eat the cake and have it too.
We live in a society that requires money just to survive. How can any venture not have money as a goal?
Therefore, it’s always at least about money but probably more than that. And when you consider the time investment and risk associated with a startup, it might be a loss if you’re only considering the money.
I'm so sick of these rants that claim there is no motivation in creating a business other than to make money. There can be no passion for something, there can be no vision for a better future or a way to improve communities. No, every business can only be focused on maximizing profit, and damn the consequences.
That is a load of horseshit, and that view only serves to perpetuate that stereotype. To be sustaining is what a businesses needs to survive, but many businesses have missions an ethos of doing good as well.
anyone notice the picture they used. The founder are standing behind an artistic rendition of a fiery bird... somewhat akin to phoenix. Which is written in elixir. Which is what whatsapp was written in.
It's quite interesting how so many comments here are pro Facebook, anti Whatsapp founders. How big is Facebook's astroturfing department? (Just a theory. But it seems a bit glaring to not point it out.)
The moral pangs suffered by the filthy rich, concerning the means by which they became wealthy is as old as time. Sadly it works. How many people remember Alfred Nobel as the “merchant of death” and how many remember him for the Nobel Prizes? If they were more than trivially bothered they’re always free to divest themselves of their fortunes.
WhatsApp up until now was not pivoting to a full social network. That, on its own, was worth a lot to Facebook ; if WhatsApp did and was successful, it would have cost Facebook much more than 20B, perhaps closer to 100B in value.
Now that FB got their money’s worth of “WhatsApp not competing”, they want to actually profit of it.
Also, whatsapp’s Interaction and name database (“metadata”) is super useful to Facebook. Likely not $1B useful, but still a database FB would otherwise pay millions for.
You must be either the most
naieve person on the planet or a complete moron to sell your company to an advertising company and not expect them to put advertising in your product. Of course he wasn’t noble enough to turn down the money in the first place and turn his product into a big buisness by himself. WhatsApp was literally just a user grab based on a ToDo list app idea released at the right time. Guy should spend Facebooks money on some therapy and move on with his life.
Please don't post shallow dismissals to HN, and especially not indignant rants. I realize that's what the internet seems to be for, but we're trying to do better than that here.
> You must be either the most naieve person on the planet or a complete moron to sell your company to an advertising company and not expect them to put advertising in your product.
I know both Acton & Koum from Yahoo!. To describe either as "naive" or "a complete moron" is ridiculous. If that is the depth of your thought, it would explain why you're writing angry comments on a message board while they are retired billionaires.
Even if you're replying to a shallow and dismissive comment, personal attacks have no place here. We have to resist this temptation if we're to have any hope of an insightful discussion.
I think "somewhat dishonest" is a better term. They aren't morons. They knew they were selling to a cutthroat advertising business. To feign surprise, after becoming a retired billionaire out of said advertising business's purse, seems disingenuous. "I was offered a lot of money and traded a material risk to our users' privacy for a lot of money, for myself and my employees" is closer to the truth.
He wrote that as a counterpoint to the idea of hypocrisy that is radiating from Acton's latest statements - "of course he wasn't noble", which is what he pointed out as the likely explanation, not naivete nor "being a moron".
I mean, there are plenty of billionaires who make ridiculous statements from time to time. Donald Trump being one of them, for example.
WhatsApp's founders are awesome! But Acton shouldn't be surprised that FB behaved as they did. He is smart and knows that publicly he should act surprised.
> I mean, there are plenty of billionaires who make ridiculous statements from time to time. Donald Trump being one of them, for example.
I think it was established during the election that he isn't a billionaire. He also makes ridiculous statements on a weekly if not hourly basis, so "from time to time" is misleading.
Consider that turning down the very very large offer would also have meant turning down the money for his hard working employees. Not such a simple choice.
But, as he openly acknowledges, he did sell out to a terrible company.
Facebook is no worse than any other advertising company. Social media is just an unremitting cesspool, and any company based on it has a high likelihood of encountering the wall of toxicity. But if you think Facebook is bad, Google, owner of literally every facet of your technological life, has all of the data on you that Facebook has and more. The only difference is that Google made less PR mistakes, and when people think about Google they aren't reminded of all the inane things their relatives post on their wall.
Snapchat are trying to become facebook. Whatsapps plan was to charge people money to use their service. Its amyones guess if that would have been successful, but it would have been far nobler than advertising.
Those plans were words. As long as they do not offer a legally binding commitment to their users never to track users/never to do ads in their software etc. there is no reason why one should consider this as more than some vague plan.
As they Romans said "caveat emptor" (the buyer shall beware). Or as is is written in Faust by Goethe: "Denn, was man schwarz auf weiß besitzt, Kann man getrost nach Hause tragen." ("That one can take back home, and use, What someone’s penned in black and white." (source: https://www.poetryintranslation.com/PITBR/German/FaustIScene... ).
Whatsapp was among the first inter-platform chat app. Kik was another. It didn't matter if you were on a Nokia (Symbian), iPhone, Blackberry (BBM was big at the time) or Android. They also solved for many individual phones globally that no one would go near to build their network.
For these reasons I don't see Whatsapp as a Todo app. Chat apps did exist, but there wasn't really many alternatives for inter-platform chat like there is today.
This comment breaks the site guidelines, which ask: "Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something."
We've asked you quite a few times to stop posting unsubstantive comments to HN. If you don't stop, we're going to have to ban you.
Even if you're a billionaire - $850M is not chump change. I would have a non-trivial time walking away from that much money no matter how much I was worth.
I would hope that someone worth 3.6 billion would have a much easier time walking away from 850 million than someone worth 1 million would walking away from 200 thousand.
To violate one's moral code should surely be worth more than 200k, if they're already taken care of financially.
You sell something for billions of dollars to a giant entity who makes money by selling user data, you should realize they will want to make money to pay for those billions. Most of the time such a purchase results in the original founders departing. You may as well leave at first opportunity. You can always build something else, now with your own money.
