Zuckerberg's 180

It appears that Mark Zuckerberg is finally waking up to a world where privacy matters. This week, the Facebook CEO proclaimed that he would be shifting the social network towards an encrypted and privacy-focused platform where users everywhere can rest assured that their information and communications remains restricted. Zuckerberg’s blog post, reflecting a 180*-turnaround from his previous stance around open-sharing, which the Company’s business model depends on for advertising and targeted marketing efforts. While it’s certainly possible that the new strategy is steering the Company in a different direction, it’s also likely that the approach timely coincides with the onset of expanding privacy regulation and heightened legislative scrutiny around consumer data protection. Regardless of the ‘real’ reason for Zuckerberg’s about-face, it’s clear that the medium and long-term consequences are not immediately visible.

That said, some obvious questions are being raised, such as: 1) How will Facebook replace the $56B in revenue reported last year; 2) How will Facebook monetize ads appearing in private communications versus in open-sharing newsfeed?; and 3) What are Facebook’s plans to leverage WhatsApp, Instagram, and Messenger for financial transactions, similar to capabilities within WeChat, PayPal, or Venmo?

For example, WhatsApp is the world’s biggest messaging platform, with over 1.5B users, including 200M in India. Facebook has yet to charge a penny for the free messaging service, but that could change suddenly once the realities of its evolving business model set in.