32 | FORBES ASIA OCTOBER 2018
light this story will bring and is quick to
underscore that Facebook “isn’t the bad
guy.” (“I think of them as just very good
businesspeople.”) But he paid dearly for
the right to speak his mind. “As part of
a proposed settlement at the end, [Face-
book management] tried to put a non-
disclosure agreement in place,” Acton
says. “hat was part of the reason that I
got sort of cold feet in terms of trying to
settle with these guys.”
Facebook is probably the most scru-
tinized company on the planet, while si-
multaneously controlling its image and
internal information with a Kremlin-like
ferocity. “hanks to the team’s relent-
less focus on building valuable features,
WhatsApp is now an important part of
over a billion people’s lives, and we’re ex-
cited about what the future holds,” says
a Facebook spokesperson. hat kind of
answer masks the kind of issues that
just prompted Instagram’s founders to
abruptly quit. Kevin Systrom and Mike
Krieger reportedly chafed at Facebook
and Zuckerberg’s heavy hand. Acton’s ac-
count of what happened at WhatsApp—
and Facebook’s plans for it—provides a
rare founder’s-level window into a com-
pany that’s at once the global arbiter of
privacy standards and the gatekeeper of
facts, while also increasingly straying
from its entrepreneurial roots.
It’s also a story any idealistic entre-
preneur can identify with: What hap-
pens when you build something incred-
ible and then sell it to someone with far
diferent plans for your baby? “At the end
of the day, I sold my company,” Acton
says. “I sold my users’ privacy to a larger
beneit. I made a choice and a compro-
mise. And I live with that every day.”
DESPITE A TRANSFER OF SEVERAL bil-
lion dollars, Acton says he never de-
veloped a rapport with Zuckerberg. “I
couldn’t tell you much about the guy,” he
says. In one of their dozen or so meet-
ings, Zuck told Acton unromantically
that Whats App, which had a stipulated
degree of autonomy within the Facebook
universe and continued to operate for
a while out of its original oices, was “a
product group to him, like Instagram.”
So Acton didn’t know what to expect
when Zuck beckoned him to his oice
last September, around the time Acton
told Facebook brass that he planned to
leave. Acton and Koum had a clause in
their contract that allowed them to get
all their stock, which was being doled
out over four years, if Facebook began
“implementing monetization initiatives”
without their consent.To Acton, invoking this clause
seemed simple. he Facebook-Whats-
App pairing had been a head-scratch-
er from the start. Facebook has one of
the world’s biggest advertising networks;
Koum and Acton hated ads. Facebook’s
added value for advertisers is how much
it knows about its users; WhatsApp’s
founders were pro-privacy zealots who
felt their vaunted encryption had been
integral to their nearly unprecedented
global growth.
his dissonance frustrated Zucker-
berg. Facebook, Acton says, had decid-
ed to pursue two ways of making money
from WhatsApp. First, by showing
ads in WhatsApp’s new Status feature,
which Acton felt broke a social com-
pact with its users. His motto at Whats-
App had been “No ads, no games, no
gimmicks”—a direct contrast with a par-
ent company that derived 98% of its rev-
enue from advertising. Another motto
had been “Take the time to get it right,”
a stark contrast to “Move fast and break
things.”
Facebook also wanted to sell busi-
nesses tools to chat with WhatsAppusers. Once businesses were on board,
Facebook hoped to sell them analytics
tools, too. he challenge was WhatsApp’s
watertight end-to-end encryption, which
stopped both WhatsApp and Facebook
from reading messages. While Facebook
didn’t plan to break the encryption,
Acton says, its managers did question
and “probe” ways to ofer businesses an-
alytical insights on WhatsApp users in
an encrypted environment, according to
Acton.
Facebook’s plans remain unclear.
When Sandberg, Facebook’s COO, was
asked by U.S. lawmakers in early Sep-
tember if WhatsApp still used end-to-
end encryption, she avoided a straight
yes or no, saying, “We are strong believ-
ers in encryption.” A WhatsApp spokes-
person adds that WhatsApp would begin
placing ads in its Status feature next
year, but that even as more business-
es start chatting to people on the plat-
form, “messages will remain end-to-end
encrypted. here are no plans to change
that.”
For his part, Acton had proposed
monetizing Whats App through a me-
tered-user model, charging, say, a tenth
of a penny ater a certain large num-
ber of free mes sages were used up. “You
build it once, it runs everywhere in
every country,” Acton says. “You don’t
need a sophisticated sales force. It’s a
very simple business.”
Acton’s plan was shot down by Sand-
berg. “Her words were ‘It won’t scale.’ ”
“I called her out one time,” says
Acton, who sensed “greed” at play. “I was
like, ‘No, you don’t mean that it won’t
scale. You mean it won’t make as much
money as... ,’ and she kind of hemmed
and hawed a little. And we moved on.
I think I made my point.... hey are
businesspeople, they are good business-
people. hey just represent a set of busi-
ness practices, principles and ethics, and
policies that I don’t necessarily agree
with.”
When Acton reached Zuckerberg’s
oice, a Facebook lawyer was pres-
ent. Acton made clear that the disagree-
ment—Facebook wanted to make money
through ads, and he wanted to make
it from high-volume users—meant heFORBES ASIA
ACTON’S PLAN WAS SHOT DOWN
BY SANDBERG. “HER WORDS WERE‘IT WON’T SCALE.’”