Facebook Inc. has reportedly put its plan to sell ads inside WhatsApp on ice, a move that will likely set back the company’s efforts to realize a return the $22 billion it spent to acquire the service.

The development was detailed by the Wall Street Journal on Thursday afternoon. Unnamed sources who spoke to the publication said Facebook until recently had a team of WhatsApp employees assigned to figuring out the best way to blend ads into the service’s interface. That team, the insiders divulged, was disbanded sometime in the last few months.

Facebook has made no secret of intentions to get more aggressive in making money from WhatsApp. At a marketing event in the Netherlands last year, the company showed attendees a proof-of-concept ad format that looked like a regular status update but featured content from brands.

Though not surprising, Facebook’s plan to extend its advertising business to WhatsApp has proved somewhat controversial. The initiative was reportedly what drove WhatsApp co-founders Jan Koum and Brian Acton to quit the company before all their stock awards from the acquisition had a chance to vest. The pair deliberately avoided putting ads in WhatsApp while it was independent, reportedly even going as far as changing the service’s terms of service before Facebook completed the deal to complicate future advertising efforts.

The insiders who spoke with Journal said that the social network’s monetization push will going forward focus on providing customer communications tools for businesses. However, Facebook reportedly still has plans to introduce ads at “one point” in the future.

It’s unclear exactly what drove the social network to shelve the project. One possible reason may be the continued scrutiny Facebook is facing from regulators worldwide, particularly around privacy. 

Serving up ads in WhatsApp with the same level of targeting Facebook enables on its namesake platform and Instagram may require the company to collect more data about users. Currently, Facebook can’t read user messages because of the app’s end-to-end encryption. At a time when the company is facing an ongoing investigation into its privacy practices and multiple other parallel probes, a push to harvest more data about WhatsApp users to enhance ads might have further complicated its relationship with regulators.

WhatsApp is already drawing scrutiny as it is. According to a report from December, the U.S. Federal Trade Commission is weighing whether to block Facebook’s ongoing project to integrate the service more tightly with its other social media properties.

Photo: Christoph Scholz/Flickr