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In the last two decades, a new realm has emerged for us humans. Yes, you guessed it correctly, it’s the “Digital Realm.” The so-called digital realm allows us to communicate with the world out there. It has a far greater reach since you don’t have to be physically present to exchange your ideas with another person. While sitting in front of a laptop in a small town (let’s say Rourkela, Odisha), I can talk to my friend who lives in De Moines, Iowa, the United States, with ease. 

With the advent of the Internet, the world got smaller and more connected than it was ever before. Nowadays, it’s hardly possible to imagine your life without being constantly connected to the Internet. The term associated with it is called “Always on.” For the younger generations, it has to be “Always on.” 

While Internet has been there for a while, “Social Media” is the child of this century. Although the first social media site was Six Degrees, made by Andrew Weinrich, it is safe to assume that social media boomed after the advent of Facebook. On social media, people started sharing things about their lives, which they couldn’t earlier. The more our lives became digital, the less we had control over it. 

Hootsuite, a social media management platform, reports key statistics and new social media behavior from 220 countries. Here are a few key figures in the report published on July 2021:

  • Currently, there are 5.27 Bn mobile users globally. That’s roughly 67% of the world’s population.
  • Since last year, 117 Mn mobile users have been added (almost 10 Mn users/month)
  • Internet users have increased by more than a quarter of a billion since this time last year, registering a year-on-year growth of close to 6%
  • No. of internet users have increased to 4.8 Bn as of this year. That’s roughly 60% of the world’s population.
  • They are 4.48 Bn social media users in this world. That’s 57% of the world’s population. Since last year, more than half a billion users have added (a 13% increase over the previous year)

As with everything related to technology, the “Digital Realm” brought with it a few demons, and the biggest of them was the “Threat to our privacy.” These days, digital giants like Facebook and Google literally know all about us, personal information, likes, dislikes, and other intricate details of our lives. This would not have been a problem if we didn’t regularly see the data breaches that these giants are having. 

This year alone, data of 533 million Facebook users got leaked. This includes users’ phone numbers, full names, locations, e-mail addresses, and biographical information. Besides Facebook, other organizations also face the threat of data breaches, which ultimately harm you and me (the users).

Among the different categories of social media applications, the most affected will be the applications we use for regular conversations like WhatsApp, Telegram, and others.

Moreover, with all that’s happening around us, users are also demanding platforms and applications that can give them privacy to interact online. Fortunately, there is an organization whose ultimate aim is “User Privacy.” This organization is Signal. It is an open-source project which aims to create a privacy-conscious platform for its users. But then the question is how does Signal make money? Does it even make money? What is Signal’s business model?

What is Signal, and how does it work?

Signal is a private messaging application and an alternative to popular private messaging applications like WhatsApp, Telegram, Facebook messenger, etc.

Though Signal has been around for seven years (inception in 2014), it popped on the users’ radars early this January when WhatsApp updated its privacy policies. The revised policy stated that users would have to agree to share their data with Facebook. Post this, the famous CEO of Tesla Inc., Elon Musk, tweeted “Use Signal” to his then 42 Mn followers on Twitter.

The effect of this tweet was so powerful that an unaffiliated Signal Advance saw its shares rise 5,100% in three days. The platform is also endorsed by other personalities like Edward Snowden and Jack Dorsey (CEO of Twitter and Square). Signal was already used by journalists and people who have wanted full privacy in their conversations for a significant time now. 

Signal uses something called an E2EE (end-to-end encryption), which encrypts the messages on the platform, and only the sender and the receiver can see the messages.

Signal is so serious about user privacy that they don’t keep the key to the encryption. This way, even they can’t see the messages of the users. They also don’t have any cloud-based backup server (unlike WhatsApp), preventing access to the users’ messages. They also don’t store any metadata of their users.

Signal can be used on desktop and phone, but it stores only messages on one device (since there is no cloud-based backup); hence, you won’t be able to see your messages from one device in another. Videos, voice messages, and photos are also encrypted on Signal’s platform. 

These privacy features are above the regular features of other private messaging applications like group calls, deleting messages for one or more (if you accidentally sent the message), and tagging people to check particular threads.

How does Signal make money? What is the business model of Signal?

When it comes to this question of making money, Signal is very different from others. Signal is a non-profit organization focused on serving its users with the best practices around privacy. 

Other applications like WhatsApp make most of their money through WhatsApp business and WhatsApp pay. How Does WhatsApp Make Money?

Signal doesn’t make money through its platform, but it accepts user donations in the form of US dollars or cryptocurrencies like Bitcoin and Ethereum. This helps the app to shift its entire focus on privacy issues and make the platform more user-friendly. 

In 2018, Signal expanded into Signal Foundation after WhatsApp co-founder Brian Acton joined Signal. Acton left WhatsApp (acquired by Facebook) after having disagreements over monetizing through advertisements and some matters on user privacy. Acton joined Signal as Executive Chairman and supported Signal with a $105 Mn zero-interest loan in 2018. This is expected to help Signal for some time, and also, users can see features arriving sooner than expected. 

Signal slowly is becoming the preferred platform for users concerned with their privacy. There has been a significant in the number of users and downloads of Signal. 

As of May 2021, Signal had more than 105 million total downloads, and the app had approximately 40 million monthly active users. The number of global installs of Signal increased over twofold, from 1.2 million installs in September 2020 to three million installs in April 2021. The number of Signal installs reached its highest in January 2021, with 51 million installs onto Android and iOS devices.

What does the future hold for Signal?

This year Signal was able to achieve some crazy statistics. The application was downloaded 1.3 Mn times on January 11th, the highest global downloads recorded in a day. But Signal isn’t able to maintain decent download rates during the year. This is because of the number of alternatives present out there like Telegram.

In India, similar to Signal, Telegram was also downloaded a lot in January after the WhatsApp policy update. This is because people are more interested in the features different platforms offer and less concerned about the privacy infrastructure.

But in the future, we can expect a change in the mentality of the users as we understand more about what is essential for us and what is not. We at The Strategy Story are very excited to see how Signal grows in the future.


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Navjeet Nanda
Author

A recent MBA graduate and a Blockchain consultant, Navjeet believes you stop learning the day you choose not be curious enough. Has deep interest in financial markets and business strategy. Dreams to become a VC someday.

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