WhatsApp to share user data with Facebook

The messaging service WhatsApp will start sharing phone numbers and other user data with Facebook Inc., a moneymaking strategy that strays from its promise that little would change when the app was acquired by the social network in 2014.

In a blog post Thursday, WhatsApp said its first update to its terms of service and privacy policy in four years will allow coordination with Facebook to analyze how people use its service, better fight spam and make friend suggestions.

The change, also designed to let its more than one billion users communicate with businesses, is likely to raise privacy concerns and rankle users who relied on WhatsApp’s previously stated assertion that it was built “around the goal of knowing as little about you as possible.”

“Even as we coordinate more with Facebook in the months ahead, your encrypted messages stay private and no one else can read them. Not WhatsApp, not Facebook, nor anyone else,” WhatsApp said in the blog. “We won’t post or share your WhatsApp number with others, including on Facebook, and we still won’t sell, share, or give your phone number to advertisers.”

Still, on Thursday, many privacy advocates like Brussels-based EDRi recommended users switch to another encrypted texting and calling app, Signal, which former National Security Agency contractor Edward Snowden recommends. “This kind of sudden and immediate change to how personal data is collected and used, thrust upon millions of users with a flourish of PR and new legal language, is much too common in our current data-driven environment,” said Michael Zimmer, associate professor at the School of Information Studies at the University of Wisconsin-Milwaukee.

Jan Koum, WhatsApp’s founder and chief executive, said the app would experiment with new monetization models in January while announcing the messaging app’s plans to drop its subscription fee—the app’s only source of revenue at that point.

Mr. Koum, now a Facebook director, said WhatsApp could be used by banks to notify customers of fraudulent transactions or airlines to alert travelers about delayed flights. The new terms of service won’t allow banner ads from other advertisers on the service, WhatsApp added.

Facebook, which generates the vast majority of its revenue from ads that appear in its news feed, is exploring ways to generate revenue from its stable of apps, including photo-sharing app Instagram, virtual-reality company Oculus VR and its other messaging app, Facebook Messenger. Facebook’s monetization plan for Messenger also relies on connecting businesses with users, although it hasn’t generated revenue from these efforts yet.

Users need only a phone number to sign up for WhatsApp. A Facebook account isn’t required. WhatsApp said users who signed up as of Aug. 25 have a 30-day window to opt out of sharing some account data with Facebook after accepting the new terms of service. The app rolled out end-to-end encryption earlier this year.

Under the changes to WhatsApp, Facebook will now be able to recognize when someone is using its main service as well as WhatsApp. By sharing a phone number with Facebook, WhatsApp said, the social network can improve on friend suggestions and show relevant ads. WhatsApp claims it can better fight spam using more personalized data from Facebook.

Other Facebook apps such as Instagram might use WhatsApp data in the same way. Facebook doesn’t plan to integrate WhatsApp and its other messaging service, Messenger.

When the Federal Trade Commission cleared Facebook’s $19 billion acquisition of WhatsApp two years ago, it said both companies would be required to give users notice and obtain consent before sharing information beyond their privacy settings, and to maintain a privacy program to protect consumers’ information, in line with Facebook’s 2012 agreement with the FTC. The deal’s value later rose to $22 billion.

Thursday’s changes likely can’t be applied to data users have already shared with WhatsApp, said Ryan Calo, a professor of law at the University of Washington. “You can’t make a change like this retroactively under the FTC’s view of deception,” he said.

WhatsApp steered users to an extended FAQ about the policy change. Its new terms of service runs more than 7,000 words versus 2,700 for the previous version.