The future of micro-messaging

Jack Eustace examines China’s dominant messaging app and where it might be going next

The Chinese name for WeChat is Wēixìn, which translates literally to “micro-message”. The app’s actual existence stands in direct contradiction to its name, as WeChat is anything but micro.

Released in 2011 by Tencent Holdings Limited, the app presents itself as China’s “super-app for everything”. Currently with over 980 million active users, WeChat is a social media messaging app, much in the vein of Facebook Messenger or WhatsApp. The difference in WeChat’s appeal, however – and the reason it has taken off in China in ways that its Western counterparts have failed – is in how it broadened its horizons beyond simple messaging. WeChat is a communication app, but it can be equally defined by its status as a commercial service. WeChat allows its users to exchange money with other users, pay for goods in physical shops, make bookings, organise medical appointments, and book taxis. In addition to these services that may seem rudimentary, WeChat features quick response (QR) codes for each individual user. Having your QR code scanned by another user is the equivalent of exchanging business cards.

WeChat is not offering revolutionary services; much of what it accomplishes can be done already through Western software that came out of Silicon Valley long before Tencent capitalised upon the exploding field of e-commerce. Yet WeChat has indeed erupted into the daily lives of the Chinese, and the main factor in this dominance comes from Tencent’s understanding of its market. China’s relationship with internet technologies is vastly different to our own. Commercial information services developed in the West, featuring a gradual departure from pre-web technologies to our current status as a culture swimming in the internet.

In America, smartphone messaging apps did not take off overnight. Particularly in older age demographics, they faced a significant competitor in the form of mobile phone plans based around SMS messaging. China, however, came to the table at a later stage than Western nations, owing in part to its government’s distrust of unregulated information exchange and selective censorship of social media services from Western nations. As a result, by the time the Chinese finally began to embrace internet services, they were at a point in time and technological development where they were operating in an internet world having skipped the developmental “early internet” phenomena of email. This skip forward left an opening for messaging apps to quickly fill the market, accounting for Tencent’s explosive financial growth and continuing widespread adoption of WeChat by the people of China.

It is estimated by the technology consultancy BDA that WeChat earned about $1.8 billion in revenues last year; HSBC estimates that the app could be worth over $80 billion only six years after launch. Recently, the app hit a market capitalisation value of $529.9 billion, a figure which is significant insofar as Facebook’s same value stands at $528.5 billion: a small, yet significant difference. WeChat’s vast earnings come from a strategy notably different from Western competitors.

While Facebook generates the majority of its revenue from advertising, Tencent allows its users to purchase virtual features like emoticons. It sources another vast amount of its revenue from its extremely popular in-app games, many of which require payments to enhance the experience. Tencent’s understanding of its market cannot be overestimated. It has pushed itself onto one of the world’s largest populations at a time when most of China is rushing to embrace as much internet technology as the West has done in over double the time. More Chinese access the internet via smartphones than do so in the United States, and WeChat’s swift compression of multiple e-services into one app has allowed it to nip competitors in the bud before they even had the chance to compete.

China’s rush to embrace the internet has revealed a surprising amount of trust amongst the general population when it comes to companies like Tencent. Over half of WeChat users have linked their bank cards to the app to access the full range of services and further compartmentalise their lives around a single point of online contact. Meanwhile, Western applications have yet to convince users to trust them with financial information. It is for this reason that WeChat’s influence will most likely not be exported to the West any time soon, given the notable difference in attitudes towards trusting information services.

At the same time, Facebook and its equivalents are unlikely to make a significant dent in the Chinese market, given that WeChat managed to gather all possible e-services under its own umbrella before Facebook could even try to spread itself into a nation whose government already has a strained relationship with Western social media. American tech-giants such as Apple, Microsoft, Amazon, and Alphabet (the parent corporation of Google) are larger than Tencent, but China’s internet restrictions fatally stunt their growth in the country.

Of course, WeChat’s game-changing structure and domination of the world’s fastest-growing market does not exempt it from the multitude of problems that can often plague its peers. In 2016, Tencent was awarded a score of 0 by Amnesty International. The report in question was an evaluation that ranked technology companies on how effectively they can protect the human rights of their users. This placed Tencent at the bottom of a ranking of 11 companies, with the list also featuring Apple, Google, and Facebook. In addition, a report by The Economist labelled Chinese society as a “free-for-all of cybercrime, malware and scams”. WeChat has won over a significant amount of users to its platform, but it remains to be seen how effectively it will be able to sustain itself as its brand grows.

Although Tencent has declared that they are not focusing on the app’s overseas expansion in particular, it is making significant inroads into allowing the Malaysian e-market to facilitate a widespread adoption of WeChat. Notably, it recently acquired an e-payment license in Malaysia, which will allow users in that country to perform transactions using WeChat. An examination of how effectively the app is adopted in Malaysia will be crucial into understanding how Chinese-based information technologies spread into the rest of Asia. If this does in fact take place, the rate of WeChat’s spread into Western markets may be indicative of China’s place in the global market further down the line, given that we are living in a world where the rate of progress and the balance of power is increasingly measured by how we operate online.