What WhatsApp’s astounding scale means for tech policy

[Commentary] The WhatsApp story is a great one -- almost too good to be true. In 2009, Brian Acton, one of two WhatsApp co-founders, was turned down for a job by Facebook, the firm that just bought his company for billions.

Jan Koum, the other co-founder and a Ukrainian immigrant, signed the $19 billion deal on the door of the Mountain View (CA) welfare office where his mother used to get food stamps. Facebook is not paying for revenue or technology. Facebook is paying for scale. In large part because of its own vulnerabilities.

When firms, products, and user bases have the ability to grow (or shrink) this fast, they can completely change the nature of industries in no time at all. And this has profound implications for policy. Messaging, chat, Skype, Facetime, Xbox conversations -- these apps have completely changed the worlds of voice, email, and mobile. With further disruptions to come. This is what we call “dynamic competition.” And it’s this idea of very rapid change, unpredictability, and overlapping technologies and business models that policymakers need to keep in mind as they consider regulatory efforts like “net neutrality,” the IP Transition, and a possible update to the Communications Act.
[Swanson is president of Entropy Economics LLC, a strategic research firm]