Analysis: Privacy outrage around WhatsApp valid, but update inevitable?

Headlines shouting about the brisk rise of Telegram and Signal emerged over the past few days after rival WhatsApp updated its terms of service asking users to allow its parent Facebook and its subsidiaries to collect user data, phone number and location. While the content of the messages are said to remain encrypted, the data collected would presumably allow for more targeted advertisements on the Facebook owned platforms and allow the network to invest more into areas such as eCommerce.

According to reports on Reuters, these privacy concerns have led to more than 100,000 users installing Signal across app stores such as Apple and Google and telegram saw over 2.2million downloads, according to Sensor Tower.  Sensor Tower also added that new installs of WhatsApp fell 11% in the first seven days of 2021 compared with the prior week. Meanwhile, the privacy concerns saw Turkish anti-trust officials to launch an investigation into Facebook and WhatsApp, according to reports on Bloomberg.

But despite the public outcry, Joseph Chua, managing partner of Aiken said that the move makes perfect sense as Facebook looks to augment itself as a super app. WhatsApp, in the current communications space, faces many potential risks from the nature of its product compared to its competitors. While the chat app might be well entrenched in most of our lives with high active user numbers and penetration in countries such as Singapore, Malaysia and Indonesia, beyond the chat function, WhatsApp unfortunately doesn’t necessarily have an active role in users’ lives.  In contrast, WeChat for example provides services such as payment, eCommerce, video calls and rapid document sharing. Telegram, in the meantime, is designed for large groups and communities to engage with brands digitally. Chua added:

WhatsApp may be massive in scale, but without embedding itself in more areas of our lives, it is at a risk to a new entrant or disruptor.

"So the data integration with Facebook is natural, but also necessary to become more relevant in the lives of users and become harder to leave,” he added.

Chua added that while Signal's and Telegram’s uptick in users might have a spike now because of the privacy concerns raised, overall we should not discount that “both the platforms are better designed and have more functionality”. Having said that, he added that it will be hard for consumers to exit the ecosystem as the usage habit of Facebook and Instagram is already established and the needs are different.

Currently, Facebook has already integrated Instagram and its messenger function for cross-platform communications. Laura Quigley, SVP APAC at Integral Ad Science, added that today, greater relevancy and engagement can ultimately gain favours of consumers. “If companies are to thrive, the goal has to customer-centric and value-laden,” she explained.

Quigley added that WhatsApp as a function has long disrupted the manner in which people communicate. The nature of its product as a free service model, along with the ease of use, ensured mass adoption globally. In Southeast Asia, it is a trusted medium of communications and is ingrained in the communicating behaviour patterns of people.

As such, while the new privacy news has created a spike in downloads of platforms such as Telegram and Signal, they don’t necessarily indicate an exodus of consumers from the WhatsApp ecosystem, Quigley explained. She added:

I don’t think it’ll be an easy decision to make to switch or quit WhatsApp. Upfront consumer permissions and easy to understand policy updates will go a long way in retaining the trust.

“Facebook [and its ecosystem] prides itself in building technologies that help people connect with friends and family, find communities, and grow businesses and it’s definitely a valuable ecosystem for people to be and transact on. As long as people find value, I don’t see any shift happening away from the platform anytime soon,” she added.

Explaining further on brands’ challenge in reaching and building relationships with consumers and the upcoming disruptions from the death of the third party cookie, Nimesh Desai, CEO of Wunderman Thompson said that there is an increasing need to invest in first party data. “With email as a channel having lesser impact, channels such as Facebook messenger and WhatsApp offer the opportunity for better service to existing customers with timely and relevant communications and for small and medium businesses to create micro marketplaces. The key is to have the right value proposition,” Desai added.

An overreaction?  

Following WhatsApp’s announcement of its updated terms and removal of the passage that said you could “choose not to have your WhatsApp account information shared with Facebook”, many consumers and media outlets criticised the platform for crossing a grave privacy line. But in reality, WhatsApp has been sharing information on a large chunk of its users with Facebook, as early as 2016 – except for those who actually opted out of sharing data with the parent company which was open for a period of 30 days.

Quigley added that today, data privacy is a hot topic as consumers are much more aware of their personal data, where it lives, and who can access it. Coupled with the increasing frequency of data breaches, leaks, and losses, it comes as no surprise that consumers remain guarded.

But on the flip side, according to the IAS Consumer privacy survey, eight out of 10 consumers in Singapore and Indonesia said they were aware that websites and apps collect. The survey found that the majority of Singapore consumers are willing to share personal data with shopping (53%) and social media (50%) apps/websites for a more relevant and personalised ad experience. In Indonesia, 65% of consumers are willing to share their personal information on social media for relevant targeting and 57% for targeted email/messaging. 

So while data privacy remains a concern for 2021 and beyond with GDPR maturing, PDPA increasingly getting activated in Southeast Asia, and India’s proposed Personal Data Protection Bill, consumers are still open to the exchanging their information for a more personalized experience.

Adding on to the conversation, Aiken's Chua said that issues around privacy will only gain momentum given the coverage around constant data breaches and increasing hacking incidents.

“As the world gets more and more digitised, the need to work, play, shop in secured spaces will only increase and gain importance. If your business model runs contrary to this, whereby it requires you to sell or allow advertisers to target your users. Then this will constantly put you at odds, against the rising tide of privacy,” he added.

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