That sparked global outcries and a rush of new users to competitor private messaging apps including Telegram and Signal.
WhatsApp on Friday (Jan 15) said it would delay the new policy launch to May from Feb 8, that the update was focused on allowing users to message with businesses, and that the update does not affect personal conversations, which will continue to have end-to-end encryption.
"This update does not expand our ability to share data with Facebook," it said in a statement.
"While not everyone shops with a business on WhatsApp today, we think that more people will choose to do so in the future and it’s important people are aware of these services," it said.
Facebook has been rolling out business tools on WhatsApp over the past year as it moves to boost revenue from higher-growth units like WhatsApp and Instagram while knitting together e-commerce infrastructure across the company.
Facebook acquired WhatsApp for US$19 billion in 2014 but has been slow to monetise it.
The app already shares certain categories of personal data, including the user's phone number and IP address, with Facebook.
"We don't keep logs of who everyone's messaging or calling. We also can't see your shared location and we don't share your contacts with Facebook," it said.
WhatsApp said in October that it would start to offer in-app purchases via Facebook Shops and would offer firms who use its customer service messaging tools the ability to store those messages on Facebook servers.
WhatsApp said at the time that chats with a business using the new hosting service would not be protected by the app's end-to-end encryption.