MWC: WhatsApp by itself “is worth more than $19bn,” says Zuckerberg

ZuckerbergFacebook CEO Mark Zuckerberg took to the stage in Barcelona this evening to deliver this years most highly-anticipated keynote at Mobile World Congress.

Here to speak mainly about the project to deliver affordable internet in emerging markets, Zuckerberg was of course first pressed by interviewer David Kirkpatrick, author of The Facebook Effect, about why Facebook bought WhatsApp for such a huge sum last week – $16bn upfront in cash and shares with a further $3bn on the way.

“Almost half a billion people love using WhatsApp for messaging – it’s the most engaging app that weve ever seen on mobile by far.” He pointed out that 70 per cent of its users visit it every day and the company is on a path to connect more than 1bn people. “By itself it’s worth more than $19bn. This will be a huge business.”

He didn’t give away much more detail about how it might change WhatsApp’s monetisation strategy, currently a subscription service, but said it would help the company to find a “more profitable model”. Asked by an audience member what Facebook would be doing with all of the messaging data it now has access to, Zuckerberg assured the audience that it was not being kept and used at present.

Asked which company would be next to be bought by the Facebook machine, which acquired nine companies last year and has already gobbled up three in 2014, Zuckerberg said: “After buying a company for $16bn, you’re probably done for a while.”

Zuckerberg called an ‘on ramp to the internet’, helping people access jobs, healthcare and education, but said it would eventually lead to paid consumption of news, apps and other services.

He outlined plans to offer “free or cheap” text-based and low bandwidth services en masse, which he said would also create a profitable model for carriers to deliver additional services.

The “upsell”, as Zuckerberg termed it, could be delivering links via the Facebook feed that are not included in the basic service package. A pop-up might appear, he said, outlining that if you want to consume it, you can buy a data plan, all in one tap.

Testing with the Globe operator in the Philippines has seen the number of people using data double and subscriptions to Globe grow by 25 per cent, he explained. The company is at MWC, it would seem, to find three or five more partners for the next year to deliver these basic services for free – and he said they will be back in the coming years with a programme that can work for everyone.

While many assume, most likely rightly, that a lot of the 5bn mobile phones on the planet will be upgraded to smartphones in the coming years, Zuckerberg highlighted that the data connection is the ongoing, long-term expense. “We’re not on a path to connect everyone unless something pretty dramatic changes. We need to form partnerships – no one company can change the way the internet works by itself.”

Is Facebook the new systems integrator for the internet?

Affordability is of course a huge issue, he said, and then convincing people that have never had internet access before that they need it. “They may not know why they would want a data plan,” he said. Taking a swipe at Google, he singled out balloons –  Project Loon – as an unnecessary innovation.

He explained that his vision for Facebook, shared with partners at that include Qualcomm and Ericsson, along with newly-bought WhatsApp, is “to connect everyone in the world”.

He pointed to the slides that were playing before he came on stage, put together by hosts of MWC, the GSMA, outlining that another 1bn people would be connected to the internet by 2020. “I hope we can do a lot better than that,” he said.

Not to imply that Zuckerberg is doing all of this out of the goodness of his now gold-plated heart he said: “For self-interest, it will increase the profits for all involved,” which would then increase investment in infrastructure. But, he admitted this would not be making money any time soon. “The ad markets in these countries dont exist in a way where were going to break even,” yet. “We’ll do something good for the world – eventually well find a way to benefit from that somehow,” he added.

He said this would all be achieved by reducing the cost of infrastructure, the amount of data used to deliver services and by increasing  the efficiency of the upsell. Facebook’s own data efficiency efforts have already reduced the data consumption of an average user in a given day from 14MB to 2MB – achieved in just a year. “We were doing a lot of things that were fairly wasteful,” he admitted. He said that they are well on their way to making that just 1MB, with particular help from October’s acquisition, Onavo.

NSA spying revelations

Asked whether the NSA spying revelations cause an issue for Facebooks expansion  globally, Zuckerberg agreed that it had caused a problem, particularly for American internet companies. But he said this had brought competitiors together to solve the issue. “It’s not awesome. They have a responsibility to protect folks and also be transparent about what they’re doing,” he said. All in all, this was a reasonably confident MWC debut from Zuckerberg, arguably the most important man in mobile right now, and based on what he had to say, probably the first of many Barcelona appearances.