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“ZapZap”: How WhatsApp transformed communications in Brazil

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WhatsApp has completely changed the way individuals and small businesses interact with each other in Brazil

Brazil is the 5th largest country in the world[1] and currently the 13th most unequal country per the World Bank[2]. Because of these factors, it is very challenging for any product or service to appeal to all social classes and to become completely widespread in Brazil as WhatsApp has. Since its introduction in 2009, the messaging app has grown to become the most popular app in the country, being used by roughly 85% of smartphone users[3].

WhatsApp is one the most popular communications app in the world, currently being used by over 1 billion users in almost every country[4]. It was created by Jan Koum and Brian Acton, both former employees of Yahoo! In 2009. In 2014, when WhatsApp had only US$20 million of revenues, it was bought by Facebook for US$19 billion, in a transaction that involved both cash and Facebook stock as payment[5].

But why has “ZapZap”, a popular nickname to WhatsApp,grown so much in Brazil? With a minimum wage as low as R$880 (US$256[6]), Brazilians are price sensitive and do not have income to spare with expensive mobile phone plans. In June 2016, Brazil had 251 million active lines, despite a population of roughly 200 million people, where Prepaid lines correspond to 70% of that number[7]. This particularly high penetration of 1.25 lines per person is mainly due to carriers’ choice of offering free calls and SMSs to same carrier phones, which led individuals and small business owners to have one line of each carrier to always place and receive calls for free (example below).

Example of Small Business Advertising (in Portuguese)
Example of Small Business Advertising (in Portuguese)

And as mobile internet penetration in Brazil grew, reaching 84 million people (72% of all mobile phone users)[8], users saw the opportunity to further reduce their mobile expenses by concentrating their communications to a single line and communicating to other carriers for free using the app. The ease of use of the App, that doesn’t need the user to create an account using the cellphone number as login, associated with group message functionalities and media sharing further fueled the fast adoption of WhatsApp.

Now, wide adopted, WhatsApp is changing the way people, businesses, politicians and journalists interact with each other:

  • Businesses: SMEs have used WhatsApp both for promotion and to improve levels of client relationship. Salespeople use WhatsApp to communicate more frequently with customers, as well as customers use it for real time demands to service providers.
  • Politics: In the latest Presidential election in 2014, candidates from both sides used WhatsApp to diffuse video and messages during their campaigns at no cost and relying on sharing through family and friends’ groups to reach the general population[9].
  • News agencies: News agency and TV channels have leveraged WhatsApp to reduce lead times to report breaking news by getting leads directly from viewers and readers (see below).

 

News program inviting users to send leads through WhatsApp
News program inviting users to send leads through WhatsApp

Moving forward, the biggest challenge to this new operating model is regulation. Justice has already blocked WhatsApp in Brazil three times because of drug-related investigations, where Facebook/WhatsApp refused to track messages from potential drug dealers, affecting almost 100 million users[10]. Without any regulation, there is no way to guarantee that the app will not be used for illicit purposes. Also, there is no way to avoid judges investigating those cases to continue to block the app and affect millions of people and SMEs all over the country.

Nonetheless, WhatsApp in Brazil continues to grow in both number of users and intensity of usage and the absence of competitors’ reaction seems to indicate that it will continue to reshape communications all around the country.

(636 words)

[1] https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

[2] http://wdi.worldbank.org/table/2.9

[3] Deloitte Mobile Consumer Survey – https://www2.deloitte.com/content/dam/Deloitte/br/Documents/technology-media-telecommunications/GMCS2016-Brazil.pdf

[4] https://blog.whatsapp.com/616/One-billion?l=en

[5] http://www.forbes.com/sites/parmyolson/2014/02/19/exclusive-inside-story-how-jan-koum-built-whatsapp-into-facebooks-new-19-billion-baby/#7997847c4ffb

[6] As of 11/15/2016 – 1 USD = 3.44 BRL

[7] http://www.anatel.gov.br/institucional/index.php/noticias/noticia-dados-01/587-em-junho-brasil-soma-44-4-milhoes-de-linhas-ativas

[8] https://www.emarketer.com/Article/Smartphones-Widely-Adopted-Brazil/1013461

[9] https://noticias.terra.com.br/eleicoes/das-redes-ao-whatsapp-dilma-e-aecio-investem-na-tecnologia,9ad9ab9f27919410VgnVCM10000098cceb0aRCRD.html

[10] http://www.cnn.com/2016/05/02/world/whatsapp-suspended-brazil/

5 thoughts on ““ZapZap”: How WhatsApp transformed communications in Brazil

  1. Whatsapp has been revolutionary in India too! It is interesting to read some of the similar effects of whatsapp in Brazil.
    India had some of the lowest mobile phone tariffs in the world and whatsapp forced telecom companies to go even lower.The telecom companies are shifting from voice-call plans towards the internet data centric plans.
    Whatsapp has changed the way the Sales teams communicated amongst themselves and with their clients.
    However, it is not as common to use whatsapp in US. I wonder what was the difference during the initial launch which made the popularity of whatsapp vary by country.

  2. Thanks for sharing. The privacy concerns you raise are very relevant, especially given the recent Apple-FBI court case in which the FBI was trying to coerce Apple to “hack” its own phone to share data with the law enforcement authorities. I believe technology providers such as Apple and WhatsApp should place a large emphasis on privacy / encryption, as they currently have been doing, but I also believe they have an obligation to assist law enforcement authorities whenever possible. This is a very difficult line to walk, and I would like to see the large technology providers (Apple, Google, Facebook, etc.) come together and define guidelines / standards they will operate by in order to give the public and law enforcement officials more confidence that they have society’s best interests at heart.

  3. WhatsApp is a great app. It was the leader in many aspects of Voice over Internet Protocol (“VoIP”), and that lead to its quick market proliferation. With competition from other VoIP apps such as WeChat, Slack, and Groupme, WhatsApp’s innovation seems to be venturing into dangerous ground. It’s recent move to encrypt all texts makes policing very difficult, and facilitates terrorist and criminal activity https://www.wired.com/2016/04/forget-apple-vs-fbi-whatsapp-just-switched-encryption-billion-people/. Indeed, the Paris terrorist attacks were coordinated using the app. Hence I agree WhatsApp’s greatest threat is regulation, not only from telecom regulators, but also from national security agencies.

  4. I love WhatsApp! It’s really funny though – WhatApp has simply not taken hold here in the US as it has internationally. WhatsApp at this point is 1 of 6 messaging apps I use, but I use it almost exclusively for communicating with friends and family who are either currently based outside the US or used to live abroad.

    I think one of the reasons it was adopted more quickly abroad that here in the US is because people also just did not get that hooked on SMS as we do here in the US. Texting is the normal form of communication here, and once the iPhone came out, all iPhone users could communicate via iMessage over data networks. I guess the rest of the world is more diverse in its phone choice (many more Android users) and WhatsApp, or other data-based communication services, helps fill that need better.

  5. Such an interesting read Marcelo! As usual there are a large number of parallels between Brazil and India- Facebook and Google compete the most for daily active users (DAU) in India, and while three of the top five used apps as measured by DAU are by Google (YouTube, Google, and Gmail), followed by Facebook, but WhatsApp follows right behind.
    I’m really curious to see the impact competitors will have on WhatsApp in these peculiar economies in South America, South Asia and Africa. WeChat, in particular, by Chinese giant TenCent seems to be poised participate in a fight for superiority, especially since it solves the unique problems that are inherent to these regions by striving to be everything at once: a platform for chatting, e-commerce, gaming, and banking.
    What’s your take on this?

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