Airtel, Reliance Jio, Vodafone-Idea and Google's 'WhatsApp problem' in India may have just grown bigger

WhatsApp has made customer service messaging free for businesses on its platform, making it the cheapest channel for enterprise communication. This move aims to enhance AI chatbot interactions and increase its market share in India, which is currently dominated by traditional SMS. WhatsApp's new pricing model aims to further tap into India's enterprise messaging market that is worth around Rs 2,500 crore, with traditional SMS holding about 90% of the volume share at 55-60 billion texts per month, according to industry estimates. WhatsApp reportedly holds a 30% value share.

Cellular Operators Association of India (COAI), the body that represents India’s top three telecom companies -- Airtel, Reliance Jio and Vodafone-Idea. In a letter to the telecom ministry, COAI has accused global technology giants, such as Microsoft and Amazon, of "presumably circumventing and bypassing the legal telecom route" by using WhatsApp to send enterprise messages to customers. The letter claimed that this caused a likely Rs 3,000-crore annual revenue loss to both the Centre and the service providers.

To tackle WhatsApp, Google introduced an alternative mobile phone messaging system within the country, aimed at disrupting WhatsApp’s stronghold among enterprises for customer communication. Vodafone Idea (Vi) recently took the lead by partnering with Google to offer Rich Communication Service (RCS) messaging to Indian enterprise customers. Industry insiders have predicted that Reliance Jio and Bharti Airtel are likely to soon follow suit.

WhatsApp's 'free message' to businesses
Incidentally, this is the second rate cut announced by WhatsApp in six months. In August, WhatsApp reduced its prices for business messaging by 16-97% in various global markets to tackle growing competition from Google’s RCS and Apple’s upcoming entry into the segment. The price cut was 63% in India, according to a June announcement.

"Effective November 1, 2024 — We are making service conversations free," Meta, the owner of WhatsApp, announced on its website. Previously, service messages on WhatsApp—such as customer queries on order status or flight ticket rescheduling—were charged at Rs 0.25 per message in India. In comparison, SMS costs between Rs 0.12-0.15, and Google’s RCS (rich communication services) is priced at Rs 0.20-0.25.

"We occasionally make adjustments to our offerings to better reflect the ways in which the service is used and the types of information people are choosing to receive,” a WhatsApp spokesperson told Economic Times.

The Rs 2500 crore market and growing
So far, despite price cuts, WhatsApp has not been able to significantly increase its volume market share. The reason is partly due to regulations that require banks and government departments to use SMS for all transactional messages. But this may change as starting in April 2025, WhatsApp will also make utility messages (account updates, transaction alerts) free, which could significantly impact SMS, where 80% of the volumes currently fall into the utility category.

The enterprise messaging market, valued at just under Rs 2,500 crore as of March 31, 2023, is poised for further growth. As businesses increasingly rely on digital payments and e-commerce, the pie continues to expand.