When things get ugly, determination makes it beautiful

The primary concern, according to its content and community guidelines, posts that are violent, abusive, non-consensual, contain hate speech or are explicitly pornographic. “We have created algorithms and processes to ensure that the community doesn’t experience any content that is disturbing or provocative in nature and doesn’t threaten anyone’s privacy. Our algorithms are getting better,” says Ahsan, chief operating officer at ShareChat.

Additionally, ever since Facebook’s Cambridge Analytica scandal set the user privacy debate in motion, the government has been wary of social networking platforms operating in India and has been working on framing a data protection law.

Community Guidelines

ShareChat says it is working to pre-empt this and plans to broadly comply with the European Union’s General Data Protection Regulation, or GDPR, which was implemented earlier this year and has quickly become a benchmark for privacy law.

Currently, the company stores a user’s login data, contacts list (with consent), location data and device details, including what other applications are installed on the phone. The user agreement allows ShareChat to share this data with third parties such as business partners and advertising agencies. The firm’s privacy policy, though, adds that this data will not be shared on an individual basis, but presented in an anonymized, aggregated form to advertisers.

Show me the Money

The big question: Popularity aside, will ShareChat ever make money? While the founders say they have evaluated ways to monetize the product, Sachdeva says there won’t be implemented anytime soon. Definitely not this year.

One of the obvious avenues that ShareChat is looking at for revenue is advertising. Another is micro-transactions where the company can charge users for certain services like horoscopes.

It is a strategy notorious for its simplicity. By 2021, the number of Indian-language internet users is expected to be 536 million, making every vernacular application a darling of advertisers. The kind of data ShareChat collects (and can share with advertisers), can easily help them analyze users and plan targeted advertising.

“Data management platforms for advertising brands are always looking for partners who can help provide a target audience, despite the recent scrutiny around data privacy,” says Vidya S. Nath, director, digital media, at consulting firm Frost and Sullivan. “Acquiring a large user base across a fragmented demographic could make such applications a valuable partner for any telco or advertiser.”

Approach questionable though

But the viability of such an approach is still questionable. First off, revenue per user for the audience ShareChat caters to is bound to below. Second, most social networks in India have and are facing the challenge of sustaining active usage of their applications.

“In a recent study, we found that even for popular e-commerce apps and sites, the percentage of conversion of registered to active users is 10% for the leading two e-commerce apps (Amazon and Flipkart), while the majority of them have less than 2%. Users of social media communication apps can be even more fickle,” says Nath.

Take the example of Hike. Till 2016, the Tencent-backed startup was one of the fastest to enter the unicorn club. But since then, the company’s daily active users have dropped by about two-thirds, from 23 million to 8 million. Over time, Hike’s key features lost relevance when WhatsApp launched similar propositions. Today, its edge is gone and Hike has fallen way behind its competitors.