Entrepreneurs

Analysis | Why WhatsApp’s New Privacy Rules Sparked an Exodus

1. What does the policy say?

WhatsApp is now reserving the right to share data it collects about you with the broader Facebook network, which includes Instagram, regardless of whether you have accounts or profiles there. Much of the policy, which is about monetizing WhatsApp, is broadly in line with what came before, but it now states clearly that “WhatsApp receives information from, and shares information with, the other Facebook Companies. We may use the information we receive from them, and they may use the information we share with them, to help operate” and market services. The option to share data with Facebook has existed for years, but it was just that: optional. From Feb. 8 it becomes mandatory.

2. Can Facebook read my WhatsApp now?

No. Your conversations are encrypted end-to-end, meaning not even WhatsApp itself can access them. However, by using WhatsApp you may be sharing with it your contacts list, location, financial information and usage data, as well as your phone’s unique identifier, among other types of so-called metadata. These may be linked to your identity, according to WhatsApp on its listing in Apple Inc.’s App Store, and it’s this data the privacy policy stipulates must now be agreed can be shared with Facebook.

3. Why does Facebook want the data?

It says it needs it to help operate and improve its offerings. More broadly, almost all of the $21.5 billion in revenue Facebook generated in its third quarter of 2020 came from ads, and there are none in WhatsApp. The company wants to be able to serve more targeted ads to people on Facebook and Instagram by also knowing their usage habits on WhatsApp, and let businesses take payments in WhatsApp for items that, for instance, were clicked on in Instagram ads.

Turkish President Recep Tayyip Erdogan’s media office and his country’s defense ministry said they’re dropping WhatsApp. Technology billionaire Elon Musk endorsed rival app Signal to his 42 million Twitter Inc. followers. The registration service for Signal crashed after an influx of new users overwhelmed its servers. On Jan 10., it tweeted: “We continue to shatter traffic records and add capacity as more and more people come to terms with how much they dislike Facebook’s new terms.”

5. Is the policy the same globally?

No. There’s a difference in the text for Europe compared with the rest of the world. In the U.S., for instance, WhatsApp explicitly says it wants to be able to let users start connecting their Facebook Pay account “to pay for things on WhatsApp,” and let them chat with friends on other Facebook products, such as Portal, “by connecting your WhatsApp account.” This text does not appear in the version applicable to Europe.

6. Why is Europe being treated differently?

European data protection authorities, which under the European Union’s strict privacy laws are empowered to fine companies as much as 4% of global annual revenue if they breach the bloc’s rules, in 2016 had expressed “serious concerns” about the sharing of WhatsApp user data. EU antitrust authorities in 2017 fined Facebook 110 million euros ($134 million) for misleading regulators during a 2014 review of the WhatsApp takeover but stopped short of overturning the merger approval. Facebook had told EU regulators during the review it technically wasn’t possible to combine WhatsApp data with its other services.

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