World

How WeChat became the app to beat

Facebook recently launched a new "Instant Games" platform as part of its Messenger app.

Instead of downloading yet another game from Apple iTunes or Google Play, users can now play games through Messenger, without leaving Facebook.

But the idea for a messaging app to bundle games and other app-like services is not new - China's WeChat has been doing this for years.

WeChat, which has more than 800 million monthly active users today, was initially modelled off WhatsApp, but it has since integrated social media with free messaging and calls.The Beijing government has long banned foreign websites it deems suspicious. You cannot access Google, Twitter, YouTube or Facebook in China.

In their place, a slew of apps that bear some early resemblance to their Western counterparts have evolved into entirely different species.

In the West, Facebook and Google are obsessed over mobile advertising, amassing user data to fine-tune their increasingly powerful algorithms to better target end-consumers.

In China, because of its largely isolated environment, Internet companies have found ways to get consumers to pay, either by charging transaction fees or through in-app purchases.

WeChat decidedly focused on connectivity, morphing what was once a stand-alone messaging platform into an indispensable mobile portal for making payments, booking doctor appointments, filing police reports, hailing taxis, accessing banking services, video conferencing, playing games and much more.

WeChat is Facebook, Twitter, WhatsApp and Zynga all wrapped up into one.

"Quite frankly, the trope that China copies the US hasn't been true for years, and in mobile it is the opposite: The US often copies China," said Mr Ben Thompson, founder of tech research firm Stratechery.

MOBILE PAYMENT

Take mobile payment as an example.

In 2013, WeChat debuted its first payment system. Users can send each other money, pay utility bills and even invest in a wealth fund through the app.

Its parent company, Tencent, invested billions of dollars in ride-sharing company Didi Chuxing (China's Uber) and group-buying service Meituan-Dianping (China's Groupon), so users can order a car or shop for group deals without leaving WeChat.

Over the past years, Tencent convinced retailers such as McDonald's, 7-Eleven and Uniqlo to accept WeChat Pay.

Chinese Internet giants are fast becoming all-encompassing super apps, and Facebook now has some catching up to do. As one American venture capitalist puts it, WeChat is there "at every point of your daily contact with the world, from morning until night".

In a country where more people use the Internet via their mobiles than in the US, Brazil and Indonesia combined, WeChat is particularly attractive to advertisers.

But the reason why big banks, airlines, hotels and restaurant chains have no issues in signing up for WeChat is that the company does not store end-user data.

All WeChat did was open up its platform to an application programming interface, or API.

Its proposition is simple - "Your customer's data stays with you. We are only interested in providing the user interface."

It makes sense. The last thing WeChat wants is to deal with local governments, who will keep knocking on its door, demanding access to user data.

But Facebook's mainstream business will always be advertising. And to feed that monster, customer information, artificial intelligence and data mining will always be of top priority.

Paradoxically, they are anathema at WeChat.

The rise of WeChat to become an all-in-one app depends critically on its lack of interest of storing customer data.

Launching a gaming business model may help Facebook to expand its scope. But it would be a stretch to say Facebook would soon become the "WeChat of America".


The writer is a professor of strategic management and innovation at the IMD business school. This article, published in The Business Times yesterday, was edited for length.

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