It has been nothing less than soap opera in the last few months for Twitter. Twitter poll to make the buying decision, Proposal of the deal on Twitter instead of boardrooms, Denials, Bots, Dramatized court case, and Firing of Twitter leadership. Finally, after all the drama we are at the juncture where Elon owns the company honoring his $44B agreement made in April.
The first order of business was to state that former president Donald Trump would be allowed back on Twitter. The second was the announcement to make Twitter an “everything app”.
What does it mean to be an “X” or “everything app”? No one really knows what X or everything app means at this point, it’s just a figment of Elon’s imagination. But if we’re to take everything app as another version of China’s Tencent WeChat. WeChat is a Chinese app that started in 2011 as a super app. Used by over a billion people (mostly in Mainland China) basically for everything including chat, payments, social, sharing photos/videos, search, news, mini-programs (ride and food delivery services), etc. It’s a one-stop shop.
WeChat is so huge in China that it also poses existential threats to Apple, where people are ready to ditch iPhones in favor of WeChat. WeChat is also pushing China to be a cashless society by introducing payments by scanning QR codes. Paytm in India is doing something similar. It may not be a super app and it does classify itself as a fintech platform. However, outside of core financial transactions Paytm builds user engagement by providing a host of utility services such as ordering medicines, etc.
The US does not have a real superpower app yet. Zuckerburg tried the idea with Facebook and Crypto. It failed as the Libra project was closed down in 2019. PayPal is another contender with its acquisition of Venmo and square is positioned well to build it as well.
The big question is why do we need a super app? Well, it’s the basic economic principle of the internet – your attention. Look at these stats from WeChat. More than 30% of people that use WeChat spend more than 3.5 hours on the app (see chart below). Compare this with the average time spent by an average social media user in the US is 147 mins.
For a moment, if we were to imagine Twitter as a super app, the basic functionality that a super app should offer is payments and the ability to perform a financial transaction on the platform. This is a big unanswered question in the US. Making super apps interact with the traditional Payments market this is where the Chinese market was different. China went from a cash-driven economy to a cashless fintech economy bypassing credit cards completely. Chinese consumers did not use AMEX, Visa, MasterCard, etc. As a result, Chinese app developers were able to create financial subsidiaries and clearinghouses enabling them to bypass traditional payment systems.
The biggest roadblock to building a super app will come from Apple and Google. Both giants do not want to cede control payments in their respective app stores. Both of them generate revenue by collecting transaction fees on purchases within their respective marketplaces. If Super app users were to come on either of the platforms, it will be offering a big portion of their sales to these giants. In China, Tencent broke the paywall by moving customers to a browser to complete payments instead of the app.
Apple’s rules currently forbid third-party developers to host app stores within their apps. Apple and Google are also making it harder for 3rd party apps to collect and share user data.
Regulators in the US and Europe are more critical of the internet platform. Even China, in recent months, has forced WeChat to open up its platforms to rivals. It shows the country where Super apps first rose to power realizes its too much power for a company to be a super app.
Let me conclude by asking the question, what about the consumer is it good or bad to be in a super app environment? The biggest benefit of super apps to a user is mini-programs. Mini programs are lightweight apps that run inside another app. This allows one app to perform the services of another app. China succeeds with this concept due to the lack of choices available to people in terms of commerce. The US, for example, offers users a plethora of choices and this amount of choices in super apps will make them non-functional.
Supers apps are walled gardens and I believe American consumer is not ready for a very restricted walled garden. Apple is also a walled garden but the real estate is much much bigger.
So dear Elon, You may have a vision of building “X” but Americans are not ready for it. Moreover what separates Twitter from other apps is its function as a serious social media forum where news is created every minute. There are better ways to monetize Twitter which I previously explored in my article here.
I had mentioned:
The biggest cultural impact of Twitter is how news and media sources quote Twitter as part of their news. You and I may not get our news from Twitter but the news agencies quote Twitter. This influential behavior is enormous.
I have also provided two solutions: (Read them in detail here)
Solution 1 – Divide Twitter into services and social media company. I believe if third parties were to build applications on Twitter Service, competition would help solve some of Twitter’s complicated and seemingly intractable content moderation problems.
Opening its platform to third-party developers also would enable new business models that might improve Twitter’s effort to satisfy more users. Charging platform fees on third-party generated UI revenue should be one of the ways forward.
Option 2 – Charging for Twitter. Another option is to charge entities to use Twitter as a service. Elon tweeted “Twitter will always be free for casual users, but maybe a slight cost for commercial/government users”. This could be a powerful way to start exercising paid social media. Governments that have gotten so used to putting news and updates on Twitter, would not hesitate to pay to stay connected to their voters. Same with commercial services, who put every minor update in addition to paying for advertisements will buy this service to stay connected to the users.
Cheers
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