Opinion: WhatsApp and Comcast’s Wealthy Acquisitions Show That We Need More Dumb Pipes

Opinion: WhatsApp and Comcast’s Wealthy Acquisitions Show That We Need More Dumb Pipes

Feb 24, 2014

With WhatsApp and Comcast both in the news for being involved in big acquisitions, they may seem like disparate stories. Well, they’re not: both signal the continuing demise of neutral services and universal protocols that anyone can implement. Nobody wants to be a dumb pipe because there’s no money in doing so. And more importantly: there’s lots of money in being proprietary.

It’s hard to fault the creators of WhatsApp for cashing out: $19 billion is a lot of money, especially with their small team. That Snapchat turned down $3 billion looks to be both smart and stupid: smart in that having a lot of users just proved to be extremely valuable and that they could get more at some point, but also in that the most popular guy in school just asked out someone else. Facebook has a large market valuation and fears its irrelevance: it’s what has sunk in plenty of internet titans before them, and becoming a legitimate player in the data messaging category when Facebook Messenger has failed to do so in a meaningful way is a necessary move. Facebook will go down swinging, at least.


But the very need for services like WhatsApp, Facebook Messenger, Line, Kakao and the rest are merely a market inefficiency because SMS is inefficient and expensive: it’s prioritized towards text-first, and carriers make a mint off of it and MMS because they can. But the one thing that SMS has in spite of all its drawbacks is that it’s universal. Anyone with a mobile phone number can send messages to anyone else with a mobile phone number. Well, except for that pesky cost problem. That’s part of why data messaging has been so popular, it jumps over the hurdles of SMS and is often more convenient thanks to availability from tablets and computers.

But all of these over-the-top services have the inherent problem of being fragmented.They’re built solely to talk to one another just through their app. And given the number of competing services out there, you may need to have an app installed just to talk to one person, and many of these services are popular in one locale versus others. Compare all this to the ease of just having one unified inbox of SMS.

And of course, there’s no reason for anyone to build one unified protocol that would work well for everyone. There’s seemingly no money in building something that someone could build a better version of. But there’s lots of money in building something that users will feel compelled to stick with because if they leave, it could affect their personal relationships. That’s why Line, Kakao, and others are building platforms around their services: they’re not just about messaging. They’re about apps, games, anything that will not only get people to stick with them over another, but to spend money while doing so. And Apple’s iMessage is all about getting people to stick with iPhone in particular.

WhatsApp was the exception: they built a service that was a product, not a platform, and it was ripe for acquisition. Now it can fit into whatever use Facebook has for it.


The problem ultimately comes down to this: there are so many companies with power: Apple, Google, the carriers especially – who could come together and create new standards. They could make a universal messaging system built to replace SMS that would go over modern data networks and wi-fi. It could tie in to mobile phone numbers but not necessarily, so that it would be easy for pretty much any internet-capable messaging device to communicate with any other without needing external apps or anything.

But no one has any reason to. Apple wants you to be so in love with Apple products and services and to rely on them so much that leaving is painful. Google has made their moves away from universality – they’ve been killing the XMPP protocol in favor of their proprietary Hangouts service. And the carriers, who perhaps would have the biggest incentive to keep people tied to actual phone numbers, aren’t. Perhaps it’s because the mobile business is so cutthroat that no one wants to work with each other? Or is it because while SMS is on the way down, they might as well beat that horse until it’s dead?

No matter the reason, it all traces down to one deep fear that everyone who works in the communication business fears: they don’t want to be a dumb pipe.

By a dumb pipe, I mean just being a way for bits to get from one end to another. This is not a good space to be in: it’s about who provides the best core service: and sometimes “best” means “cheapest.” And by being a dumb pipe, it can be easier for user to switch to a service that’s a better fit. Thus, the ultimate goal of many service providers, from telecoms to Google are to make it difficult on users to switch by locking them in to their services as much as possible.


It’s why telecommunication companies’ growth is so worrying, especially in the context of Comcast buying Time Warner Cable. Comcast already has expanded into a vertical behemoth: they sell internet service AND cable service, yes. But since they bought Universal, they also provide the content that gets piped in via those services. They own NBC, USA, NBCSN, and a wide variety of lucrative regional sports networks. And they have a big incentive to get you to consume just their content via their services, and as little of services like Netflix as possible.

See, while Netflix is a private and proprietary entity, it is a service that works perfectly on a dumb pipe. You don’t have to be on Comcast – or any ISP in particular – to use Netflix. So all Comcast has to do is to make it more satisfying to use their services. Perhaps by installing data caps to hinder video streamers with the bonus of not having their own video services go against those caps, or by throttling Netflix even on high-speed connections, making their services seem better.

They are doing – or have done – exactly that. And there’s little pushback from governments to stop them, thanks to courts overthrowing consumer-friendly regulations, and to the many other problems that governments face beyond “Netflix buffers too often.” It’s rough sledding out there right now for consumers because these corporations are only looking out for themselves. Netflix is even guilty of this – they want to lock you in by providing not just the bulk of standard consumable content from other studios, but by providing their own exclusive content. Of course, there’s nothing wrong with Netflix giving consumers compelling reasons to subscribe to them over Amazon Prime or any other streaming service, but they’re definitely playing a similar game as others are.

To stem this tide of proprietary prtocols, it’s going to take a company willing to build a protocol with the aim of building a product around it. Data messaging needs its email equivalent. It’s possible to profit handsomely off of protocols, off of providing a better way to interact with said protocol – Gmail is big business for Google, and Mailbox got wealthy thanks to a Dropbox acquisition. Email, and the internet itself, took off because they broke through the barriers of proprietary operation to connect anyone and everyone. And it’s time that someone in power – from service providers to telecoms to governments – makes a stand, not just for the interests of themselves, but for the everyday person, the ones who use their service. The internet is one of the most powerful tools that humanity has ever created, and those in power should not be able to poison and fragment it the way they have been.