How Zuckerberg Is Feeding His Facebook Conglomerate

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March 27, 2015 by Bill Johnson


It should be pretty clear to everyone now: Facebook is no longer a single social entity out to conquer the world.

“Facebook is a family of apps,” Mark Zuckerberg said at the company’s F8 developers conference on Wednesday. A further description might be conglomerate, giant squid or anything else denoting a large, multi-tentacled entity.

There’s a fundamental shift happening at Facebook. The company is funnelling more resources than ever into Messenger, pumping it up with new features that it hopes will ape the success of Asian peers like WeChat and LINE.

The goal is to morph it into a platform teeming with useful, sometimes premium services. Most of those services will host ads or cost users money, and as those business models solidify on Messenger, Zuckerberg can migrate the few that work best onto the likes of WhatsApp and Instagram.

That’s how he’ll justify the $19 billion he paid for WhatsApp in Feb. 2014, and the $1 billion he paid for Instagram in April 2012.

Over time, Zuckerberg wants Messenger to become something that looks more like an operating system than an app, hosting everything from games and entertainment, to payment services and business transactions — all on mobile.

One reason why: Messenger is simply growing faster than Facebook’s main app.

Messenger grew by 50% in 2014, while the main Facebook app was up by 23%, according to figures from market research firm GlobalWebIndex. Even when you strip out the size disadvantage Facebook’s main app has next to Messenger, the latter still has more Internet users actively using it (8.7%), compared to the Facebook app’s 7.4%.

Messenger simply has more momentum, and globally its users numbers grew even faster than WhatsApp in 2014 – by 50% compared to WhatsApp’s 34%.

One of the most important new features announced on Wednesday, Businesses on Messenger, essentially offers companies official accounts so they can communicate directly with customers.

Facebook is billing this as an attempt to “kill junk mail,” but long term it’s another way for Facebook to make money.

Facebook isn’t charging businesses like Everlane and zulily (its first two partners) to create official business accounts on messenger right now. But it would be crazy to assume the company won’t explore ways to capitalize on corporate clients like these over time, especially since business accounts have worked so well for Asian chat apps like WeChat.

“There are more official accounts created on WeChat each day in China than there are websites brought online,” says Ted Livingston, founder and CEO of Kik.

Last year Kik also introduced official accounts for businesses, allowing them to host chat bots on the app that hold automated conversations with users – a strange but growing form of advertising.

Facebook also appears to be be using Messenger as as a testing ground for similar features that will eventually migrate to other subsidiaries like Instagram and WhatsApp.

WhatsApp’s founders have long shunned advertising as a route to making money through its 700 million active users, but the way that plays out depends on how they define advertising. It turns out WhatsApp has already said in the past that it will probably turn to commercial messages in the future to make money. That could mean chat bots like Kik’s, or official accounts that take the role of call center workers.

Interestingly, Zuckerberg isn’t pushing his subsidiaries to do any of that, anytime soon.

Read more: How Zuckerberg Is Feeding His Facebook Conglomerate

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