Running Signal Will Soon Cost $50 Million a Year – WIRED

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The encrypted messaging and calling app Signal has become a one-of-a-kind phenomenon in the tech world: It has grown from the preferred encrypted messenger for the paranoid privacy elite into a legitimately mainstream service with hundreds of millions of installs worldwide. And it has done this entirely as a nonprofit effort, with no venture capital or monetization model, all while holding its own against the best-funded Silicon Valley competitors in the world, like WhatsApp, Facebook Messenger, Gmail, and iMessage.

Today, Signal is revealing something about what it takes to pull that off—and it’s not cheap. For the first time, the Signal Foundation that runs the app has published a full breakdown of Signal’s operating costs: around $40 million this year, projected to hit $50 million by 2025.

Signal’s president, Meredith Whittaker, says her decision to publish the detailed cost numbers in a blog post for the first time—going well beyond the IRS disclosures legally required of nonprofits—was more than just as a frank appeal for year-end donations. By revealing the price of operating a modern communications service, she says, she wanted to call attention to how competitors pay these same expenses: either by profiting directly from monetizing users’ data or, she argues, by locking users into networks that very often operate with that same corporate surveillance business model.

“By being honest about these costs ourselves, we believe that helps provide a view of the engine of the tech industry, the surveillance business model, that is not always apparent to people,” Whittaker tells WIRED. Running a service like Signal—or WhatsApp or Gmail or Telegram—is, she says, “surprisingly expensive. You may not know that, and there’s a good reason you don’t know that, and it’s because it’s not something that companies who pay those expenses via surveillance want you to know.”

Signal pays $14 million a year in infrastructure costs, for instance, including the price of servers, bandwidth, and storage. It uses about 20 petabytes per year of bandwidth, or 20 million gigabytes, to enable voice and video calling alone, which comes to $1.7 million a year. The biggest chunk of those infrastructure costs, fully $6 million annually, goes to telecom firms to pay for the SMS text messages Signal uses to send registration codes to verify new Signal accounts’ phone numbers. That cost has gone up, Signal says, as telecom firms charge more for those text messages in an effort to offset the shrinking use of SMS in favor of cheaper services like Signal and WhatsApp worldwide.

Another $19 million a year or so out of Signal’s budget pays for its staff. Signal now employs about 50 people, a far larger team than a few years ago. In 2016, Signal had just three full-time employees working in a single room in a coworking space in San Francisco. “People didn’t take vacations,” Whittaker says. “People didn’t get on planes because they didn’t want to be offline if there was an outage or something.” While that skeleton-crew era is over—Whittaker says it wasn’t sustainable for those few overworked staffers—she argues that a team of 50 people is still a tiny number compared to services with similar-sized user bases, which often have thousands of employees.

While Whittaker argues that Signal runs as lean an operation as possible, she also notes that many of its features cost more than they do for other communications platforms, due to the extra cost of enabling those features in privacy-preserving ways. Signal implements encryption, for instance, not just for the content of calls and texts, but for users’ contacts, and even for their user profile names and photos, as well as more obscure features, like users’ searches for animated GIFs. That means simple-looking elements of the app often require far more time-consuming and expensive engineering than would be necessary if they were offered without encryption.

Signal was originally founded with funding from the US State Department’s Open Technology Fund, but the service has since turned to donations to keep afloat. When the Signal Foundation was created in 2018 and WhatsApp cofounder Brian Acton left Facebook to become its president, he donated $50 million. But with Signal’s growing user base and staff, that donation wouldn’t cover much more than a year’s current budget for the company. Other major donors continue to cover the foundation’s costs, Whittaker says—Twitter cofounder Jack Dorsey, for instance, has pledged $1 million a year, and others Whittaker declines to name have given similarly large contributions.

But Signal hopes to increasingly rely on donations of as little as $3 that can be made through the app itself. Monthly donations of $5 or more are rewarded with a badge for the user’s account. Those small donations, Signal says, now account for 25 percent of its operating costs, up from 18 percent last year, the first full year after Signal enabled in-app contributions. But for Signal to continue to exist and grow without depending on a few wealthy individuals, Whittaker says small user donations will need to ramp up significantly.

With a nearly $50 million annual budget, can Signal actually survive on those donations? “We have to,” says Whittaker. “Signal needs to find a way to survive in perpetuity because it is the tool that we have to ensure meaningfully private communications.”

Whittaker says that charging users has never been an option—Signal would never have grown its network to a degree that could compete with iMessage or WhatsApp if it hadn’t been free all along. Nor can Signal adopt a venture capital-funded business model that would leave the service vulnerable to investors or shareholders demanding a profitable exit. Exhibit one: Elon Musk’s acquisition of Twitter and his decisions that triggered an exodus of its users. “We’re not going to get leaned on,” says Whittaker. “We’re going to stay myopically focused on our mission, without the kind of pressure to compromise that for-profit tech companies feel. And that pressure is heavy when you recognize the cost to do what we do.”

Given that privacy-focused mission, Whittaker argues that revealing Signal’s costs isn’t just about helping to raise money to keep protecting users’ communications, it also serves to call out the rest of the tech industry’s anti-privacy practices.

“The default for all this is surveillance. That’s the water we swim in. So how do we swim upstream? How do we move against this and build something that can perturb that default?” she asks. “I hope being honest about these costs leads people to ask better questions of other tech organizations, to better understand what’s actually happening and how we got into a situation where a handful of companies have such an outsize power globally based on their perfecting this surveillance business model.”

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