TIME privacy

WhatsApp Comes Up Short Protecting User Data, Privacy Watchdog Says

Fackbook Acquires WhatsApp For $16 Billion
Justin Sullivan—Getty Images The Facebook and WhatsApp app icons are displayed on an iPhone on February 19, 2014 in San Francisco City.

Electronic Frontier Foundation evaluated the way dozens of companies handle user data

WhatsApp lags behind its consumer tech peers when it comes to protecting user data from government requests, according to a prominent privacy advocacy group.

In its annual Who Has Your Back? report, the Electronic Frontier Foundation awarded WhatsApp just one out of four stars when evaluating it across various categories concerning data protection. According to the EFF, WhatsApp doesn’t publish a transparency report detailing requests it’s received from the government, doesn’t promise to provide users advance notice of government data requests and doesn’t disclose its data retention policies. The messaging app does oppose creating purposeful security weaknesses known as backdoors that let government officials stealthily gather user data. Opposition to backdoor policies has become common among consumer the tech giants.

On the other end of the spectrum, tech companies such as Adobe, Dropbox, WordPress and Yahoo received a five out of five rating from the EFF (unlike most of the companies, WhatsApp was only evaluated in four categories). These firms are doing a good job of providing users with transparency about their interactions with the government, according to the EFF’s evaluation.

Among the major cable, phone and Internet providers, AT&T performed the worst, netting just one star out of four. Sonic.net, an Internet Service Provider in the San Francisco bay area, earned five out of five stars.

Facebook, WhatsApp’s owner, did not immediately respond to a request for comment.

MONEY stocks

How Facebook Is Taking Over the World

Social Media Illustrations
Bloomberg via Getty Images

Nearly 1 billion people use the service each day.

Facebook is the undisputed leader among social networks. The company has a massive user base of more than 1.4 billion average monthly users, and it continues growing at an impressive speed considering the size of the platform. In addition to this leadership position in well established markets, Facebook is now even gaining ground in corners of the world where most consumers don’t even have access to good enough Internet connections.

The incredibly expanding social network
As of the first quarter of 2015, Facebook has 1.44 billion monthly active accounts, a year-over-year increase of 13% versus the same quarter in 2014. Daily active users stand at 936 million, growing 17% year over year during the last quarter. The fact that daily users are growing at a faster rate than monthly ones is a big positive for Facebook, as it reflects increasing engagement.

The company is also doing great in mobile, a crucial growth segment in the industry. Facebook has 1.25 billion mobile monthly users as of the last quarter, growing 24% year over year. Daily mobile users are 798 million, expanding by 31% from the first quarter in 2014.

Not only that, Facebook is also consolidating its presence across different platforms. WhatsApp has over 700 million users, and Instagram has more than 300 million active members. Services such as Facebook Groups and Messenger are also important when it comes to cementing Facebook’s relationship with users and keeping those users actively engaged. As of March, Facebook Groups has 700 million users, and Messenger is above 600 million accounts.

Going where no one has gone before
Growth rates tend to naturally slow down as a company gains size over the years. In Facebook’s particular case, the social network has arguably collected most of the low hanging fruit, meaning that Facebook is already quite ubiquitous among its target demographic group in markets where consumers have fluid Internet connections.

But this is not stopping Facebook at all, the company aims to expand its presence even in underdeveloped markets where many consumers have poor access to online connectivity. The company has launched Internet.org, a collaborative effort between Facebook and other six companies — Samsung, Ericsson, MediaTek, Opera Software, Nokia, and Qualcomm — to bring affordable Internet access to economically disadvantaged regions.

The Internet.org app provides free basic services in markets where Internet access can be unaffordable to many consumers. In addition to accessing Facebook, the app allows users to browse selected health, employment, and local information websites without data charges.

In another effort in the same direction, Facebook has recently launched Facebook Lite, a simplified version of its Android mobile app that uses much less data than the original app. Facebook Lite is 1% of the size of Facebook’s main app. It includes main features such as news feed, status updates, and photos, but it does not support video or other functionalities that require big amounts of data.

Facebook Lite is intended for users without access to reliable Internet connections. Founder and CEO Mark Zuckerberg explained in a press release, “We built Facebook Lite to be faster, more reliable and very data efficient even when Internet bandwidth is at a minimum.”

How this fits into the big puzzle
Humanitarian reasons can be important to Facebook, but it’s also worth noting that these initiatives are good for business, too. Facebook is a textbook example of a business operating under the network effect, meaning that the network becomes more valuable as it grows in size over time.

If nobody interesting is using Facebook, then the social network has no value to you. However, when many of your friends, family, love interests, or work connections are on the platform, you just can´t stay away from it for too long at the risk of missing out something important.

A bigger Facebook means a more valuable Facebook — this attracts more users and keeps them more engaged, so size is a crucial competitive strength for the company.

Many of the users Facebook is gaining with initiatives such as Internet.org and Facebook Lite will have little direct economic impact for the company in the short term, as these are generally low-income consumers which are not particularly attractive to online advertisers.

However, these projects are allowing Facebook to continue consolidating its position as the most dominant social network in the planet, and this could mean major benefits from a strategic point of view over years and even decades to come.

Read next: Twitter’s Strategy Remains Unclear Even After CEO Resigns

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TIME facebook

Facebook Messenger Has a Killer New Feature

Facebook Messenger
Facebook Facebook Messenger

It's very helpful when looking for your friends

You can now send your location to a friend directly through Facebook’s Messenger app, the company announced Thursday. You can also send a different location, say, a prospective meeting point.

Head of Product for Messenger Stan Chudnovsky said in a blog post that Facebook has been working on the feature over the last few months.

“To get started, just tap the More icon or the location pin at the bottom of your screen,” Chudnovsky wrote. “If you want to tell a friend which restaurant to meet you at, search for the restaurant and send a map of where it is. If you’re running late, send a map of where you are to your friend to let him or her know how far away you are.”

Facebook’s blog post says users’ location data isn’t compromised with the new feature:

As always, Messenger doesn’t get any location information from your device unless you enable location services for the app.

Messenger does not get location information from your device in the background—only each time you select a location and tap Send when you use the Messenger app. We are not requesting any new permissions for your information.

WhatsApp, a messaging app Facebook acquired last year in a $22 billion deal, has long had a similar location-sharing feature.

TIME Smartphones

This Is What Teens Are Really Doing on Their Phones

New report reveals all

It’s amazing how glued snake people—er, millennials—are to their palm-sized, Internet-connected rectangles. But why?

Mary Meeker, the Morgan Stanley analyst turned venture capitalist at Kleiner Perkins, today released her annual report on Internet trends. One section—slides 68 through 70, in particular—digs into the mobile habits of American youth, and it reveals some interesting statistics.

Fortune senior writer Leena Rao has a breakdown of the year’s biggest overall trends here. But for the millennial scrutinizer, here’s what the 2015 slideshow has to say:

First off, 87% of young adults—or those between the ages of 18 and 34—who own smartphones report never separating from their mobile devices: “My smartphone never leaves my side, night or day.” And four-out-of-five of them report that the first thing they do upon waking “is reach for my smartphone.” Good morning, screen-glow.

Nearly as many, 78%, spend more than two hours per day using their smartphones. And three-out-of-five believe that mobile devices will somehow vaguely rule every aspect of the future: “In the next five years, I believe everything will be done on mobile devices.”

So what do teens care about now on their phones? For those who average roughly 16 years, about one third report prioritizing Instagram as the most important social network. That’s about the same as the share that reported Facebook [fortune-stock symbol=”FB”] was the most important in Spring 2013. Today, Facebook’s share of perceived importance has halved among that demographic.

While Zuck’s friend-zone still has the most penetration of any social network—about three-quarters of 12- to 24-year-olds use it—that share is in decline. It dropped from to 74% this year from 80% last year.

Other networks that lost some share include Twitter, Google+, Tumblr, and LinkedIn. Vine stayed steady at 30% in terms of usage among socially networked 12- to 24-year-olds. And those networks on the rise? Instagram, Snapchat, and Pinterest. (WhatsApp lacks 2014 data, but clocked in at 11% this year.)

Instagram appears to be the king, for now. (Never mind that it’s a Facebook fiefdom.) Which explains why so many—44% of 18- to 24-year-olds, that is—report report using their smartphone camera at least once per day. And an overwhelming majority—about three-quarters of 18- to 34-year-olds—report that they use their cameras to post pictures to social media.

So that’s how teens are mostly using their phones. To take pictures of the world around them, and to inject those photos into and across the screens that consume their mornings, their days, their nights, and a good portion of their present lives. Not to mention the entirety their future lives, as many of them report anticipating.

Unfortunately, the report does not break its numbers out into share of selfies.

MONEY Tech

Why “Facebook at Work” Might Not Work

Facebook at work on tablet
Alamy

Enterprise software is indeed a very lucrative space, but the time, energy, and development resources that it would require for Facebook to meaningfully challenge are simply too high.

This isn’t the first time, and it might not be the last. Dominant social network Facebook FACEBOOK INC. FB -1.25% is reportedly looking to challenge LinkedIn LINKEDIN CORP. LNKD -10.52% in the enterprise segment, among others. The Financial Times reported that the social kingpin is developing a new “Facebook at Work” site geared toward corporate settings.

The service is said to feature ways to communicate with colleagues, connect with other professionals, and collaborate on documents. Personal profiles and professional profiles would be segregated for the sake of privacy, and would be free initially. Beyond LinkedIn, this service means Facebook would compete with other large enterprise software makers like Google GOOGLE INC. GOOG -0.97% and Microsoft NASDAQ 0% , as well as start-ups such as Slack.

Does Facebook have a chance? Let’s look at all of these areas where Facebook wants to make a dent.

Connecting people

Helping people make professional connections is LinkedIn’s claim to fame, and the company has established an incredibly strong business in connecting recruiters with job candidates. Before even considering monetization methods, Facebook is a much larger overall network, which means it has a shot at growing its position here.

At last count, Facebook boasted 1.35 billion monthly active users, or MAUs, worldwide. That’s over four times LinkedIn’s count of 331 million registered members. Of that total, 89.7 million members log in on a monthly basis. LinkedIn reports these as unique visiting members, but in practice they are the same as MAUs for the sake of comparison.

“Facebook at Work” is unlikely to tap into Facebook’s entire network, since its rollout is still speculative and would likely be on a small scale. Still, there’s definitely some long-term potential here if Facebook builds out the rumored service, and eventually integrates it with its broader network.

Communicating with colleagues

Microsoft Exchange is the dominant player in enterprise email, but a slew of popular chat applications are also used in the workplace. Slack has been skyrocketing in popularity recently, and is now one of the fastest-growing enterprise software applications ever.

The key to Slack’s success is the ability to integrate with a plethora of third-party services that are already popular within the enterprise segment, creating a platform out of the enterprise messaging service. Slack also has powerful search features to help workers find what they’re looking for. The start-up’s blistering growth has already attracted the attention of high-profile venture capitalists. Slack recently raised $120 million at a $1.1 billion valuation.

In general, messaging is becoming an increasingly competitive arena. Facebook has both Messenger and WhatsApp under its blue belt, so the company undoubtedly has plenty of experience with developing messaging products and services. Facebook might have some strength in consumer-oriented messaging, but it seemingly lacks the deep integrations that rival services like Slack can offer.

Playing well with others

On the collaboration front, Microsoft acquired Yammer in 2012 for $1.2 billion. Yammer is a private social network that integrates with collaboration software and business applications, and is now part of Office 365. Yammer is a big part of Microsoft’s strategy with collaboration software as it transitions away from SharePoint.

Microsoft also recently partnered with Dropbox. By integrating the other’s services, Microsoft and Dropbox will bolster the collaborative features that are critical to each company’s enterprise customers. Google Apps for Business has also been winning customers from Microsoft for years, becoming a notable player in the collaboration space in the process.

This is easily the most important area of enterprise software, since employee collaboration is so critical to productivity. This is also where Facebook likely brings the least to the table. Current providers of collaborative tools offer comprehensive feature sets and have become very entrenched in the enterprise. Facebook will face a steep uphill battle in this area.

We don’t know what we don’t know

To be fair, not much is known about “Facebook at Work.” The company reportedly uses the product internally, and only began testing it at other companies within the past year or so.

Facebook’s current portfolio of consumer offerings might not be representative of what it hopes to offer the enterprise space. However, it’s hard to imagine the company could develop a full-featured offering that spans all of these areas in under a year when incumbents have spent many more years specializing and catering to these precise needs.

On top of that, Facebook is predominantly associated with personal social networking. The ability to separate personal and professional activity might be an attempt to blur the line, but consumer connotations aren’t easily shifted. Besides, aren’t Facebook’s privacy settings cumbersome enough already?

Shares of LinkedIn fell 5% of the news that Facebook could be developing a competing service, so it seems there is indeed some investor concern. However, history doesn’t inspire much confidence in Facebook’s professional abilities, which should downplay these fears.

Facebook acqui-hired job-search site Pursuit in 2011, but hasn’t done much in the job listing space that LinkedIn is disrupting. Third-party professional networking service BranchOut attempted to carve out a niche within Facebook as a free application (casually known as the “LinkedIn within Facebook”), but failed spectacularly and is now trying to sell itself.

The risk is that Facebook could become distracted by its pursuit of the enterprise segment, rather than focus on key business developments, notably building out the infrastructure for video ads or determining some type of monetization strategy for WhatsApp.

As an investor, I do like when Facebook takes calculated risks, such as Paper or Home, even if they fail. But those were inherently low risks with high potential rewards. Enterprise software is indeed a very lucrative space, but the time, energy, and development resources that it would require for Facebook to meaningfully challenge are simply too high.

TIME Security

WhatsApp Is Making Your Messages Way More Secure

New feature makes it harder for law enforcement to access contents

The latest update to the WhatsApp messaging service announced Tuesday includes end-to-end encryption by default, which means the content of a message is only decrypted and readable when it reaches its recipient. Encrypted texts via the TextSecure protocol will now be nearly impossible for law enforcement officials or WhatsApp to access.

The new feature was created using open-source code created by the development community at Open Whisper Systems. For now the feature is only available on Android devices, but in a blog post Open Whisper Systems says it plans to expand to other mobile platforms. The encryption only applies to basic texts right now, and group messages and photo messages don’t get the extra security boost.

The new encryption protocol backs up WhatsApp’s longstanding mantra of valuing people’s security over access to users’ data. CEO Jan Koum famously wrote a missive against using data mining to serve ads on social networks years before selling the company to Facebook for about $22 billion.

TIME Terrorism

Facebook and Twitter Are ‘Command-and-Control Networks’ for Terrorists

Spy chief: U.S. technology companies are in denial over the extent they aid terror and crime

The head of Britain’s equivalent of the NSA has said that U.S. technology firms that dominate the Internet must contribute more to the battle against violent extremism and child exploitation.

Robert Hannigan, the new head of Government Communications Headquarters, has accused Internet firms of being “in denial” over the role they play in crime and terrorism, demanding they work with security services to combat the growth of groups like the Islamic State of Iraq and Greater Syria (ISIS).

Writing in the Financial Times on Tuesday, Hannigan says that unlike other extremist groups, including al-Qaeda, ISIS has “embraced the web” and grown increasingly savvy in improving the security of their communications.

While technology companies may aspire to stand outside politics, their services increasingly facilitate crime and terrorism, argues Hannigan. “However much they may dislike it, they have become the command-and-control networks of choice for terrorists and criminals, who find their services as transformational as the rest of us,” he adds.

He says U.K. security agencies need better support from “the largest U.S. technology companies which dominate the web” and calls for greater cooperation, adding that most Internet users would prefer “a better, more sustainable relationship between the agencies and the technology companies.”

[FT]

TIME Earnings

Facebook Spent $21 Billion on a Company That Just Lost $232 Million

Social Networks Facebook WhatsApp.
Marie Waldmann—Photothek via Getty Images Facebook next to the WhatsApp logo on iPhone on February 25, 2014 in Berlin, Germany.

WhatsApp barely even generates revenue, but Zuckerberg doesn't care

Facebook’s pricey purchase of WhatsApp, which closed at a whopping $21.8 billion, turned heads earlier this year because few thought the startup was making much money. Turns out, WhatsApp has actually been losing money. A lot of it.

The mobile messaging platform, which had 450 million users when the acquisition was announced, posted a loss of $232 million in the first six months of 2014, according to a new Securities and Exchange Commission filing. The company’s primary revenue source is a $0.99-per-year subscription fee that only kicks in after the first year of use — the app doesn’t show users any ads. Apparently that fee doesn’t amount to much—WhatsApp generated $15 million in revenue in the first half of 2014, according to the SEC filing.

Most of the company’s massive loss came from stock sales and issuing stock options to employees, but even when just accounting for day-to-day operational activities, the company doesn’t make money. WhatsApp had a net loss of $139 million on revenue of about $10 million last year.

Facebook CEO Mark Zuckerberg, of course, knew all of this before busting out his checkbook. Still, Zuckerberg’s not at all apologetic about spending such a large sum on such a tiny business. “This may sound a little ridiculous to say, but for us, products don’t really get that interesting to turn into businesses until they have about 1 billion people using them,” he said Tuesday during a quarterly earnings call with Facebook investors. “Once we get to that scale, then we think that they will start to become meaningful businesses in their own right.”

In addition to WhatsApp, Zuckerberg noted Instagram and Facebook’s search function as platforms that have the potential to reach one billion users and become huge money faucets. And he emphasized that Facebook is planning to make more big-ticket bets in the future. The company shocked investors when it said on that Tuesday call that its expenses will increase by as much as 70% year-over-year in 2015 because of a ramp-up in staff and, most likely, acquisitions. Facebook’s shares slipped more than 6 percent on the news.

In some ways, Zuckerberg’s willingness to spend huge sums barging into new sectors echoes Jeff Bezos’s plan to expand Amazon’s reach into an increasingly broad set of categories, like movie streaming and smartphones. The difference is Facebook has built a robust and still-growing advertising business that constantly defies Wall Street’s expectations, so it has room to roam. The social network’s ambitions will only grow from here.

Read next: This Is the Single Craziest Number in Facebook’s Earnings Report

TIME deals

Facebook Completes Its $22 Billion Purchase of WhatsApp

Social Networks Facebook WhatsApp.
Marie Waldmann—Photothek/Getty Images

The final hurdle in the deal was crossed on Friday, when the E.U. approved the purchase after much resistance from Europe’s telecommunications industry

Facebook officially sealed its massive purchase of WhatsApp, a report filed with the U.S. Securities and Exchange Commission stated, with a final price of about $22 billion. The popular instant-messaging app has been operating independently since agreeing to an acquisition by the social-media giant back in February, but the finalizing of the deal is undoubtedly a step toward greater support, and control, from Facebook.

Ukrainian immigrant Jan Koum and former Yahoo engineer Brian Acton, the founders of WhatsApp, pocketed $6.8 billion and $3.5 billion in the deal respectively, according to Forbes. Koum will also get a seat on the board, where his $1 salary will match that of Facebook CEO Mark Zuckerberg.

The final hurdle in the deal was crossed on Friday, when the E.U. approved the purchase after much resistance from Europe’s telecommunications industry.

“We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market,” the Wall Street Journal reported the E.U.’s antitrust chief Joaquín Almunia as stating.

WhatsApp, with over 600 million users across Europe, Asia and the Americas, presents an immense opportunity for Facebook, although how it will be used remains to be seen.

TIME Markets

Facebook Is Now Worth $200 Billion

Facebook Holds f8 Developers Conference
Justin Sullivan—Getty Images Facebook CEO Mark Zuckerberg

The record-setting figure is still just one-third of Apple's market cap

Facebook’s valuation passed the $200 billion mark for the first time Monday. The company’s stock closed at $77.6, a new all-time high, giving it a market capitalization of $200.26 billion, according to Google Finance.

The social network has consistently impressed Wall Street analysts in its quarterly earnings reports over the last year thanks to robust growth in mobile usage and advertising revenue. Many analysts believe future prospects for the company are extremely high because Facebook has not yet begun to monetize acquisitions like Instagram and WhatsApp or place a significant number of pricey video ads in users’ News Feeds.

Facebook is also continuing to grow its user base quickly outside the U.S. The company announced today that it now has 100 million users in Africa, which it says is half the total number of Internet-connected people on the continent.

By comparison, Apple, the most valuable company in the world, had a market cap of $590 billion at the close of trading today. Google’s market cap was about $400 billion.

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