The Rise of the Super-App
Are monopolized platforms the future of social media and the internet as we know it?
By Xische Editorial, March 20, 2019
This article is part one in a two part series on the rise of the super-application. In part two we explore how global governments are addressing the regulatory challenges posed by this new breed of application.
To say that Facebook had a difficult 2018 is an understatement. After a series of data privacy scandals and general concerns over upcoming regulation, the social media giant is shifting its business plan to maintain relevance, retain users, and generate advertising revenue. When complete, it will be the biggest shift in approach since the company’s founding. Surprisingly, the plans reveal that Facebook is about to mimic one of its major rivals – in China.
This month, the company’s chief executive Mark Zuckerberg unveiled a new strategy that will fundamentally transform Facebook’s product offering, the way it handles consumer data, and the types of sharing it will allow on its platform. In a 3,000-word blog post, Zuckerberg described how the company would make privacy through encryption and secure communications a core component of the new offering. He also outlined his plans to remove the newsfeed while blending Facebook and the other Facebook-owned platforms, WhatsApp and Instagram, into one super platform.
Fueling this new platform will be a payment service and greater e-commerce offerings. The idea is to make one app where users could do everything from share photos, chat with friends, and pay for their groceries. In the race to grab as much time from users as possible, Zuckerberg’s strategy follows a new approach used by major technology companies that offers as many services as possible in a safe and secure manner.
Facebook’s shift reveals Zuckerberg’s implicit admission that monopolized platforms are the future of social media and the internet as we know it. What is more noteworthy is that the pivot is actually not all that revolutionary because it has been done successfully before. WeChat, the Chinese super application that revolutionized the Chinese market years ago, already offers everything Zuckerberg laid out. If you can’t beat them, copy them.
WeChat, which is owned and was developed by Tencent Holdings, began as a simple messaging application similar to WhatsApp. Over time, the company added more features ranging from shopping, ordering food and restaurant reservations to booking doctors’ appointments. It also created its own payment service called WeChat Pay, which has proven key to the application’s success. The service allows users to pay both virtually and in person without cash or credit cards. Users simply scan a QR code directly in the app. WeChat claims to have 1.08bn monthly active users and its parent company Tencent said in early 2019 that it has one billion daily active users. By comparison, Facebook reports over 1bn active daily users but that number is declining in key markets such as the United States.
WeChat has more than one billion users and is rapidly expanding across emerging markets in Asia and Africa. The app’s runaway success hammers home the point that users want convenience in the form of one single application that offers myriad services.
WeChat represents one model of the future internet in which large companies monopolize our time and users mostly occupy one platform that offers multiple services. This model has worked especially well in China, where the government shields local companies from free market competition by effectively barring outside competitors. WhatsApp, Facebook, Instagram, and Google are off limits as a result of being heavily restricted in China as a result of government regulations including allowing authorities to monitor all communications. The Chinese government has thus given an advantage to companies like WeChat in exchange for backdoors into their operations, giving authorities complete control over what is said and done on the platforms.
The question is whether users will want to sign up to Facebook’s version of such a platform. For its part, Facebook is “very aware of how Tencent has been able to integrate messaging and payment and e-commerce and all of these mini-apps into one platform,” Ben Cavender, an analyst at China Market Research Group, told the Wall Street Journal after Facebook announced its business pivot.
Obviously, Facebook doesn’t operate in the same climate as China’s WeChat but the direction of travel is clear. Leading companies are going to carve out walled-off platforms that allow users to engage in a variety of services and don’t have to move off application for much. As we will explore in a follow-up piece, it is unclear how such a super platform will operate in a climate of heightened regulation. How to regulate technology companies is already a major issue of debate in the United States presidential election, with leading candidates such as US senator Elizabeth Warren calling to break up major American tech giants such as Facebook, Google, and Apple. If Facebook moves towards a WeChat super application model, how will regulators react?