Facebook is replacing some of Instagram's tech to improve privacy. Here's why it will also super-size the app's money-making potential.
- It looks like Instagram is gearing up to bring a major new revenue stream online.
- The Facebook-owned app's messaging service, Instagram DMs, is being reengineered with the tech that underpins Facebook Messenger.
- In theory, this means Instagram will be well-positioned to roll out myriad tried-and-tested revenue generating features such as chatbot ads.
- A Facebook spokesperson declined to comment on whether the company is planning this.
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Instagram looks to be setting the stage for a major new cash-printing machine.
This week, Bloomberg broke the news that Instagram's messaging service, Direct Messages (abbreviated as DMs), is undergoing a major restructuring. The entire product is being rebuilt using the same tech that underpins Messenger, one of Facebook's other messaging apps.
It's all part of an ambitious reengineering of Facebook's multiple messaging products - Instagram DMs, Messenger, and WhatsApp - that will allow them all to communicate with each other seamlessly, as well as adding end-to-end encryption.
Facebook is describing the move as part of its "pivot to privacy" -a strategic shift aimed at safeguarding users' privacy after years of constant scandals. Skeptics argue it's a way to try and make it harder to break the company up under antitrust law if the company's critics arguing that Facebook is an anticompetitive monopoly.
That may be true.
But the move has another likely consequence: It will help Instagram make a ton more money.
A 'Swiss-Army knife' messaging app
Over the years, Facebook has built Messenger into an impressively multi-functional messaging app that lets users do everything from play games with friends to receive receipts for their online shopping. Accordingly, it's stuffed full of monetization opportunities for the company, with ad units and sophisticated integrations for brands looking to interact directly with potential customers.
Instagram DMs, in contrast, are much more straightforward - they're basically just a standard messaging service.
Bloomberg reported that the basic look of Instagram DMs "won't change much" post-reengineering. But by integrating Messenger's tech under the hood, Facebook is putting in place a foundation that can accommodate new brand-centric, money-making product features. Chatbot capabilities for example, which are currently available in Facebook Messenger but not in Instagram, allow users to interact with retailers and other businesses through automated chatbots. That's a potential for revenue, through things such as paid chatbot ads, that Instagram doesn't currently have.
A spokesperson for Facebook declined to comment on whether the company was considering this when contacted by Business Insider. But as a strategic move, it makes sense; it would allow Facebook to implement tried-and-tested money making opportunities in Instagram - producing new revenue streams without having to build anything from scratch, and leveraging the Messenger team's existing knowledge on what works.
Ultimately, Facebook's goal is likely for its messaging apps to look a lot more like China's WeChat - an all-in-one messaging app from which users can do everything from ordering food to paying utility bills.
Instagram is already a cash-printing machine, with an estimated value of over $100 billion, and with a brand that has managed to stay largely free of its parent company's scandals. But this change illustrates that when it comes to monetizing the app, there are still plenty of opportunities that have still yet to be tapped.
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