While regulators have voiced their opposition to the move, Facebook continues to push ahead with the integration of its messaging apps, which will eventually enable users to cross message from Instagram to Messenger to WhatsApp without each participant having to download each individual app.
As you can see here, the new update is mandatory for WhatsApp use, with a deadline of February 8th before the new terms come into effect.
As reported by XDA Developers:
The update specifically relates to information that can then be shared across Facebook's apps, including your phone number, transaction data, information on how you interact with others (including businesses), IP address, and more.
Much of that is standard Facebook data collection (and as the current debate over Apple's coming IDFA changes has shown, Facebook collects a lot of data on its users), but the most obvious application here is the cross-integration of Facebook's messaging apps, which the platform has been working on over the past two years.
The integration, which makes a lot of sense from a user perspective, is still seen as a controversial move, because it also welds together more of Facebook's back-end systems, which some have suggested is designed to make it more difficult to break the company up, if ongoing antitrust investigations were to push for that outcome.
Indeed, just last month, the FTC launched new legal action against Facebook, which alleges that the company is "illegally maintaining its personal social networking monopoly through a years-long course of anti-competitive conduct". Part of the recommended outcomes of that push will be a divestment of both Instagram and WhatsApp - but if Facebook can argue that its messaging systems are all integrated, and that there's essentially no way to functionally separate its various apps, it may be able to avoid such, even if it's enacted.
There are, however, other applications that stem from this update. Facebook also notes that by sharing your WhatsApp info with Facebook's family of apps, that will enable users to connect their Facebook Pay account "to pay for things on WhatsApp" - which, given the company's rising eCommerce push also aligns with another key goal.
From a practical standpoint, the update makes sense, but you can imagine that some WhatsApp users will be none too pleased at being forced to share their data with Facebook more broadly, especially given WhatsApp's long-held focus on user privacy.
Still, doesn't seem like there's a lot of choice. The changes, as noted, come into effect next month.
UPDATE (1/7): WhatsApp has clarified that the coming changes do not apply to users in Europe: "There are no changes to WhatsApp's data-sharing practices in Europe arising from this update."