Facebook's $19 billion acquisition of cross-platform messaging service WhatsApp was obviously a boon for WhatsApp's founders, employees and investors, but it also proved to be a good thing for several of WhatsApp's biggest competitors.
Thanks to a post-acquisition WhatsApp outage—and perhaps thanks to concerns about the service's future under a new owner—Telegram, a rival messaging app, reportedly saw millions of downloads in the days following the announcement of the WhatsApp acquisition. At one point, Telegram announced that it was seeing 100 registrations per second.
Telegram's secret weapon: a public API?
Unlike WhatsApp, Telegram is completely free and its creators promise that the app will remain ad- and subscription-fee-free "forever." In addition, Telegram touts itself as being far more secure than WhatsApp, a selling point that may resonate with individuals concerned about privacy.
But Telegram's most powerful weapon in the battle to remove WhatsApp from its billion-dollar throne may be a public API. Using the Telegram API, developers can access the same functionality as Telegram's official apps to build their own messaging applications.
Already, developers have used Telegram's API to build clients for Windows, Mac OSX and Linux. And proving that Telegram is not at all concerned that developers might build better experiences for iOS and Android, the two platforms for which it offers official clients, Telegram offers the source code for its Android and iOS apps under an open-source license.
Telegram's public API and support for developers wanting to build their own Telegram clients stands in stark contrast to WhatsApp, which in the week leading up to its acquisition issued DMCA takedown notices for GitHub projects that were based on the reverse engineering of its private API, even though WhatsApp is based on a modified version of XMPP, an open and widely used protocol.
This raises a $19 billion question: Can Telegram's API become a meaningful competitive advantage against WhatsApp?
WhatsApp has powerful network effects and even if Telegram's millions of new users were all ditching WhatsApp, it would seem that Telegram still has a long way to go before it can realistically catch up.
But the meteoric rise of services like Instagram, Snapchat and WhatsApp show that it is possible for upstarts to gain rapid adoption by creating great experiences that do one or two things really, really well. If Telegram's API successfully attracts developers who can build superior messaging experiences across all major platforms, WhatsApp's network effects may prove less powerful than thought.
Battle of the API strategies
As Cyril Vart of French business consultancy FABERNOVEL recently told ProgrammableWeb, "APIs will be the pipeline for the 21st century gold: data." But mining gold isn't always a profitable business. Without the right API strategy, a company may never be able to turn its gold into dollars.
Twitter is the perfect example of a company that learned this the hard way. Originally, the social media behemoth encouraged developers to use its public API and imposed relatively few limitations on them. That was the foundation of a vibrant ecosystem that included a variety of third-party applications that Twitter users adopted to interact with the microblogging service. But as Twitter's focus shifted from user growth to monetization, it became clear that Twitter had to own the user experience if it was going to be able to create a viable revenue model. Twitter didn't kill its public API, which still serves a purpose, but developers of certain kinds of applications built on its public API were essentially told their contributions were no longer needed.
WhatsApp never put itself in a position where it had to grapple with a Twitter-like API strategy dilemma. The company offers no public API and has always owned the user experience on every platform it supports. Without such a private API strategy and the control it affords, WhatsApp may never have created the type of perceived value that Facebook was willing to pay billions for.
Telegram, on the other hand, is clearly committed to a public API strategy. That might make it impossible for the service to achieve a WhatsApp-like outcome, but that's not what its creators are aiming for anyway. They refer to Telegram as a "non-commercial project" and currently pay the bills using funds provided by a generous donor. But none of this means Telegram doesn't have the potential to significantly disrupt a competitor that was just purchased for 11 figures.
As WhatsApp, Telegram and others do battle, companies operating in highly competitive markets on the consumer internet should pay close attention. API strategy could play a very large role in who wins, and who loses, tomorrow's great fortunes.