Facebook (NASDAQ:FB) wants to build an app empire and the company seems perfectly happy to risk angering fans of its core product to do so.
The social media network, which sometimes still feels like its being operated out of a dorm room by a socially inept genius with little regard for the feelings of anyone around him, has decided to remove the messaging feature from its core app. This move isn't being done to benefit customers. There is no reasoning that shows that sending messages within the main Facebook hurts the product and that removing the feature offers a clear benefit to consumers.
Instead, Facebook is taking messaging out of its iOS and Android apps in order to make customers use its stand-alone Messenger app. That might be logical from a business point of view, but it's a slap in the face to casual message senders who want all their Facebook features in one place.
Tech Crunch's Josh Constine, who first reported the move, wrote that forcing users to adopt a new messaging behavior could be very unpopular.
"Not everyone wants to manage multiple Facebook apps on their homescreen or stick them in a folder," he explained. "A portion of Facebook users may prefer to keep things simple with one app for everything Facebook, even if it means it's slower and it takes more taps to get to their messages."
Messenger works well as a stand-alone app for heavy users who want a singular experience. But for people who send or receive an occasional message while reading their news feed, separating the two would be like McDonald's only offering chicken nuggets at a nearby but entirely separate store.
Facebook CEO Mark Zuckerberg attempted to explain the move to TechCrunch earlier this year:
The other thing that we're doing with Messenger is making it so once you have the stand-alone Messenger app, we are actually taking messaging out of the main Facebook app. And the reason why we're doing that is we found that having it as a second-class thing inside the Facebook app makes it so there's more friction to replying to messages, so we would rather have people be using a more focused experience for that.
That's sort of like justifying Ford removing radios from cars because they can't deliver the same experience as seeing a live concert in a premier venue. Having a message sending/receiving function in the main Facebook app is convenient for customers and pretending that removing it is a benefit is silly and a little insulting.
Why is Facebook doing this?
Facebook has a vested interest in making Messenger a strong stand-alone product -- it gives the company a hedge if its core social media functionality falls out of favor. Zuckerberg has not voiced that concern, but social media networks have historically gotten hot then fallen from grace (say hello to MySpace and Friendster for me if you can find them). Communication tools do not follow that path. Even land-line phones -- while less popular and fading fast -- are still a good business to be in and have had a much longer run than any social networks.
Owning a popular messaging service is like owning a utility. Sure it's possible a new form of communication may come along, but people will always want to communicate with other people and messaging apps are much closer to being the phone companies of today than websites and apps, which can be huge today gone tomorrow.
Clearly Facebook believes in messenging as a strong part of its future -- it spent $19 billion for WhatsApp, a company that at the time of the acquisition had essentially no revenue. What it did have is:
- Over 450 million people using the service each month;
- 70% of those people active on a given day;
- Messaging volume approaching the entire global telecom SMS volume; and
- More than 1 million new registered users per day.
At the time of the purchase Zuckerberg said WhatsApp was on a path toward 1 billion users.
Facebook makes most of its money through advertising, which grew 63% in 2013, according to the company's annual report. In 2013 Facebook also saw its mobile ad revenue top its traditional computer-based revenue for the first time with mobile providing 53% of the total. News Feed ads were cited as the most important factor in that growth and Messenger was not mentioned nor was revenue for the app broken out specifically.
The company does not specify how much money it makes from Messenger, but the iOS app does not appear to have ads in it.
New acquisition WhatsApp has a clear -- albeit nontraditional -- path to monetization. The company does not sell ads and the product is free for the first year then $1 per year. Its users are highly engaged, sending more than 600 million photos a day -- more photos than Facebook users -- and 70% of WhatsApp users are active every day, according to CNNMoney.
When it comes to messenging Facebook appears to have a strategy of amassing users now and figuring out how to make money off them later. That would be foolish for most companies, but when you have almost $8 billion in revenue in your last fiscal year you can afford to work that way.
Messenger is already very popular
The Messenger App is already the fifth most popular free app for Apple's iOS on April 11, while Facebook itself is only number 15. In Google's Play Android app store Facebook is listed as the top free app with Messenger is second.
Forcing customers into the Messenger app by removing messenging from the core app will increase those numbers, but it will do so at the expense of angering a key part of its customer base. Messenger may be a better experience, but its existence was not a secret and users could have downloaded it if they wanted it.
By making a move like this without consulting its customer base, Facebook is showing an arrogance that could damage its long-term relationship with customers. Take the the example of Microsoft, which for years was the only real choice in operating systems. The company dominated that market and was able to force its other products down customer's throats because they had no other simple, affordable choice to meet their computing needs. Once the iPad and Android were launched as viable alternatives, Microsoft saw Windows market share plummet and the company lost its dominant position.
Facebook risks the same thing. If your policy is to make massive, unpopular changes without getting user feedback (which should be pretty easy for Facebook to do), you become vulnerable. Facebook can't keep buying up every competitor (like WhatsApp and Instagram). Eventually the company will pay the price for its hubris. If it insists it knows what's best for users, the fall could be spectacular.
Daniel Kline is long Microsoft. The Motley Fool recommends Facebook, Ford, and McDonald's. The Motley Fool owns shares of Facebook, Ford, and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.