Social networking giant Facebook (NASDAQ: FB) dropped a bombshell disclosure last night. Two major executives, Chief Product Officer Chris Cox and WhatsApp chief Chris Daniels, are leaving the company. Losing Cox is a particularly hard blow, as the executive has been with Facebook since 2005. However, Daniels' exit is also notable, as he had only been in charge of WhatsApp for less than a year, after co-founders Jan Koum and Brian Acton left over disagreements about data privacy practices.
Zuckerberg's public note announcing the departures evidently didn't tell the whole story. It now seems that Facebook's plan to integrate all of its messaging services is at the heart of both departures.
Both executives disagreed with Zuck's plan
Cox has shared his farewell post on Facebook, suggesting that he's not the right man to lead Facebook's new "product direction" and indirectly implying that he would not be "excited" for the undertaking.
"As Mark has outlined, we are turning a new page in our product direction, focused on an encrypted, interoperable, messaging network," Cox wrote. "It's a product vision attuned to the subject matter of today: a modern communications platform that balances expression, safety, security, and privacy. This will be a big project and we will need leaders who are excited to see the new direction through."
BuzzFeed News reports that Cox didn't agree with Zuck's vision of interoperability across all messaging services. Many executives did not agree with the idea of adding end-to-end encryption (which has long been available on WhatsApp) by default to all of Facebook's messaging services, in part due to potential implications for Facebook's business model, according to the report.
While a less high-profile executive, Daniels has been with Facebook for over eight years, serving in a number of roles culminating in his promotion to lead WhatsApp last year. Like Cox, Daniels opposed the move to integrate messaging services, according to Cheddar. Employees respected Daniels as a strong leader, but that led to clashes with His Zuckness, who rules Facebook with an iron fist given his approximately 60% voting power.
Zuck named another lieutenant, Will Cathcart, as the new head of WhatsApp, while praising Daniels for helping "define the business model for our messaging services going forward."
That business model includes a lot of ads
A lot of questions remain regarding Facebook's fundamental pivot to emphasize privacy above all else, particularly around how it will affect Facebook's revenue model, which relies heavily on collecting as much data as possible on users and then using said data for ad targeting.
Messaging services are infamously difficult to monetize directly, and Facebook has been ramping up its efforts to insert ads in both Messenger and WhatsApp, despite Zuckerberg in 2014 famously saying, "I don't personally think ads are the right way to monetize messaging." Yet Facebook now touts its ability to allow advertisers to retarget users with sponsored messages and insert ads directly into Messenger inboxes. Daniels had announced last year that WhatsApp is preparing to put ads next to Status, the service's take on the increasingly popular Stories format that has now dominates social media platforms.
Generally speaking, end-to-end encryption is a very effective privacy tool for users. Generally speaking, giving users more privacy tools is a very bad thing for Facebook's business. Zuck will argue that he always prioritizes Facebook's community over corporate profits, but investors have little insight into how the massive shift will affect the user experience, as well as the tech giant's financial results.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.