Meta is introducing ads to WhatsApp for the first time by allowing businesses to place advertisements exclusively within the "Status" section of the Updates tab, where users share ephemeral content (a feature similar to Instagram Stories). Meta insists that these ads will not appear in private chats or personal messages, maintaining the platform’s core focus on privacy and end-to-end encryption. Meta will use limited user data, such as location, language, channels followed, and interactions with ads, to personalise these advertisements, but will not access message content, calls, or contact lists for targeting. In addition to Status ads, Meta is expanding monetisation of WhatsApp Channels by enabling channel admins to pay for promoted placement in search results and to offer paid monthly subscriptions for exclusive content, with Meta planning to take a commission on these subscriptions in the future.
From a strategic perspective, WhatsApp’s shift away from its long-standing ad-free policy presents significant opportunities alongside notable risks. In this post, we apply the concepts and methods from our book to evaluate these prospects and challenges, with particular emphasis on the insights detailed in Chapter 5 – Monetizing a Platform. The key takeaways from this chapter are summarised below.
Digital platforms can generate revenue not only by charging users directly, but also by leveraging their user base to extract value from third parties through advertising and data exploitation. Advertising enables platforms to sell user attention to advertisers, benefiting from network effects as a larger user base increases demand from advertisers. However, this may negatively impact user experience or content providers, especially if ads are intrusive or poorly matched to user interests. Freemium models and targeted advertising can help mitigate these downsides, though they introduce trade-offs between monetisation and user satisfaction. Data exploitation involves collecting and using user data to improve internal operations, personalise offerings, or sell insights to external organisations, but raises significant privacy concerns and regulatory risks, requiring platforms to balance revenue opportunities against potential loss of user trust and legal compliance.
In a nutshell, Meta must strike a balance between pursuing a new revenue stream and the risk of undermining user satisfaction. How will the company navigate this strategic dilemma, especially while remaining mindful of ongoing antitrust scrutiny from authorities in the US, EU, or India? We outline several possible scenarios for what could unfold in the short to medium term.
Scenario 1: Broad user acceptance and monetisation success
In this best-case scenario for Meta, the majority of WhatsApp users accept the presence of ads in the Updates tab without significant backlash. As a result, Ads become a robust new revenue stream, complementing Meta’s existing advertising ecosystem. It is indeed estimated that the Updates tab is used by 1.5 billion people daily (about half of WhatsApp’s monthly active users). Moreover, according to digital marketing professionals, Click-to-WhatsApp ads and business tools have already demonstrated high engagement, with open rates of 98% and click-through rates of 45-60%, far surpassing those of traditional channels. As ads are confined to a non-intrusive section, preserving private chats and end-to-end encryption, the user experience remains largely intact, and so does the user base.
Scenario 2: User backlash and quality perception decline
Alternatively, a significant share of users might express dissatisfaction with ads on WhatsApp, perceiving a decline in app quality (as Oc and Steinmetz (2025) argue). This scenario branches into two sub-cases.
Scenario 2a: Permanent user exodus to privacy-focused alternatives
In this case, a significant portion of users permanently switch to competitors like Signal or Telegram, which prioritise privacy and remain ad-free. This outcome echoes the 2021 privacy controversy when many users migrated due to privacy concerns, affecting Meta’s reputation. From a two-sided platform perspective, this triggers a negative feedback loop: user exodus weakens cross-side network effects, making WhatsApp less attractive to advertisers and reducing ad monetisation profitability. The only silver lining is that these departing users reveal a clear preference against advertising, indicating they were not the primary target audience for business ads anyway (as explained by Anderson and Gans, 2011)
Scenario 2b: Temporary user departure followed by return due to high switching costs
Alternatively, some users leave WhatsApp temporarily but eventually return due to the inconvenience of managing multiple messaging apps, and WhatsApp’s near-ubiquity, which remains indispensable. This scenario mirrors Scenario 1, as Meta preserves its user base size—albeit with some delay—benefiting revenue and platform strength. However, a key issue arises: the return of the runaway users demonstrates high switching costs, often seen as evidence of a dominant market position. In this context, Meta’s introduction of ads in WhatsApp could serve as quasi-experimental evidence of user lock-in. Such evidence would likely strengthen antitrust authorities’ case against Meta’s dominance in social networking and messaging markets, potentially justifying interventions such as forced divestitures.
Scenario 3. Managed transition and platform evolution
The third scenario reflects a future where Meta navigates the introduction of ads on WhatsApp through a combination of user adaptation, regulatory engagement, and business model innovation. It can be broken down into three sub-scenarios.
Scenario 3a: Gradual user adaptation
This would correspond to a situation in which users initially express resistance or scepticism toward ads in WhatsApp, but over time, most adapt as ads remain limited to the Updates tab and do not intrude on private messaging spaces. In this case, Meta manages to grow ad revenue steadily while maintaining user trust and engagement. The company invests in improving ad relevance and user controls, which helps mitigate backlash and supports a stable user base.
Scenario 3b: Regulatory-imposed restrictions
Here, privacy regulators, particularly in regions such as Europe and India, impose strict limits on how Meta can use data for ad targeting on WhatsApp. As a result, Meta must comply with new rules, which may reduce the effectiveness and profitability of ads. However, these restrictions can also help preserve user trust and prevent large-scale user migration, while increasing compliance costs and slowing monetisation growth.
Scenario 3c: Monetisation diversification beyond ads
The last possibility is that Meta expands WhatsApp’s monetisation strategy beyond advertising by introducing business tools, channel subscriptions, and premium features, appealing to both privacy-conscious users and businesses. This diversification reduces reliance on ads, softens user backlash, and offers new revenue streams. It also positions WhatsApp as a more versatile platform, potentially reducing regulatory pressure by providing users with more choices and control over their experience.
Conclusion
Meta’s introduction of ads on WhatsApp presents a complex strategic landscape. The best-case scenario offers significant monetisation upside with limited user disruption. However, user backlash could manifest in permanent or temporary departures, each with distinct consequences for Meta’s two-sided platform dynamics and regulatory standing. Notably, the scenario where users return despite dissatisfaction underscores high switching costs and market power, providing antitrust authorities with compelling evidence to challenge Meta’s dominance. Additional scenarios involving regulatory constraints and diversification of monetisation further nuance the outlook.
Note that this analysis deliberately focuses on the strategic dimensions of Meta’s move to monetise WhatsApp through advertising, drawing on platform theory and recent antitrust dynamics. While many other factors—such as ethical, technical, or broader societal impacts—deserve attention, the scenarios outlined here aim to clarify the business logic and competitive risks Meta faces. Ultimately, the future of ads on WhatsApp will hinge on how well Meta navigates the trade-offs between user experience, regulatory compliance, and sustainable platform growth.
