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WhatsApp Privacy Concern “Signals” New Era

January 13 2021 - Team Stockal

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Less than 15 days into the new year and stay-at-home saviours — social media and messaging apps — have been at the centre of a major global controversy. The developments around both the mediums have made people criticise the incumbent companies in these ecosystems and, in some cases, divided its user base.

It began with Twitter (TWTR), Facebook (FB), Instagram, and Snap (SNAP) suspending U.S. President Donald Trump’s accounts for inciting violence, hours after a group of Trump supporters stormed the U.S. Capitol and caused a riot that killed five people, including a police officer. The protestors looked to disrupt Congress’ proceedings that were set to certify Joe Biden’s victory in the 2020 elections. Other platforms also sought to regulate or delete any content that violated their safety rules and incited violence. Shares of Twitter were hammered after issuing the ban while the microblogging site looked to double down on its crackdown on content that incites violence, including suspending accounts that propagated the QAnon conspiracy theory. 

On the end of the spectrum, WhatsApp released new privacy changes that asked its two-billion-plus users to agree to share personal data, including their phone number, IP addresses, browser information, and battery level, among others, with its parent Facebook. The move kicked up a storm across social media and messaging platforms, with criticism and calls for boycotting the Facebook-owned firm spilling over to WhatsApp messages itself.

Giving The ‘Green’ Signal

The intense discussion in the social media revolved around alternative messenger apps that could be secure, springing up names such as Signal and Telegram. Giving the issue a frenzied push was Tesla (TSLA) founder Elon Musk’s tweet asking users to use Signal, which was then retweeted by Twitter CEO Jack Dorsey.

Days after WhatsApp’s policy announcement, more than 100,000 users across the app stores of Apple (AAPL) and Google (GOOG) installed Signal, while Telegram saw nearly 2.2 million downloads, according to data analytics firm Sensor Tower. In India, one of the biggest markets for social media and Big Tech companies, Telegram witnessed over a million downloads, while Signal was downloaded by more than 25,000 people, data from Sensor Tower further showed.

WhatsApp sought to clarify about the move, stating the update was meant for businesses.

“It’s important for us to be clear, this update describes business communication and does not change WhatsApp’s data-sharing practices with Facebook. It does not impact how people communicate privately with friends or family wherever they are in the world,” WhatsApp Head Will Cathcart said.

Both Signal and Telegram have looked to propagate their apps in the interim, with Signal highlighting the secured and encrypted messenger services it offers. Telegram, on the other hand, has said its services include features present in Signal, over and above other major offerings that make it a wholesome package.

Taking Stock

The rising popularity wasn’t just limited to app downloads, investors rushed to clinch shares of Signal and Telegram. While the latter was not publicly listed, buyers latched on to Signal Advance’s (SIGL) shares, boosting its value by awhopping 11,708% after Musk’s tweet. The shares soared from $0.60 before the tweet to $70.85, boosting its market capitalisation from $6 million to $300 million. There was just one problem — the company had nothing to do with the Signal app. Signal Advance trades on the OTC market and deals with micro-cap technology. Signal app also issued a clarification about the confusion on their Twitter account.

On the other hand, investors looked to punish WhatsApp-owner Facebook, with shares of the company shedding more than 4% so far in 2021 following the concerns. The problems around WhatsApp only compound issues for Facebook that has been battling a huge crackdown by the U.S. government on Big Tech companies that includes antitrust probes. Its tech peers Google and others too are facing the heat in this regard for using monopolistic business practices to occupy a big share of the markets they operate in. About 38 states have filed lawsuits against Google alleging monopolistic practices.

A Month’s Returns of Facebook and Google Post Lawsuit Filings 

Interestingly, tech companies, especially social media, streaming services, cloud and SaaS services providers, and messengers were the darlings of investors all through the pandemic year of 2020, as strict stay-at-home orders from global governments boosted downloads and increased usage time on these apps.

Summing Up

The WhatsApp-Signal-Telegram saga has thrown open the messaging space market, with several small and big companies looking to capture a bigger share during users’ hunt for WhatsApp alternatives. The Facebook-owned company has sought to allay concerns around privacy of users, stating that the changes don’t affect the privacy of people’s messages.  Microsoft (MSFT), too, has aggressively promoted its Skype platform. The incident has only helped users break out of a monopolistic offering and explore alternatives, while learning lessons about doing their due diligence ahead of investing in any stock. What’s in a name? A lot! 

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