WhatsApp Will Become the Next WeChat — Here’s How

WhatsApp is on its way to become the Indian equivalent of WeChat. However, I wouldn't be surprised if they expanded beyond India...

If you’ve kept up with Chinese developments over the last decade, you’ll undoubtedly have heard of WeChat, the “everything app” with over 1.1 billion MAU (monthly active users) (Tencent Q3 2019). What started as a simple messaging app has become a game console, a bank, an online healthcare service, a social network, and a gateway to ride-share, food-delivery & more.

On the other hand, Whatsapp has no value-added services nor ads but has 2 billion MAU as of March 2020 (Clement, Statista). This begs the question:

How can Facebook monetize WhatsApp?

The direction Facebook has been taken to monetize WhatsApp is that of WeChat. In a 2019 blog post, Mark Zuckerberg explained how he aims to combine Instagram Direct, Messenger and Whatsapp into one interoperable messaging system. He also talked of implementing a payment system and “offer[ing] a platform for other private services”. By combining all the Facebook products together and by looking at ways to scale vertically, Zuckerberg has repeatedly expressed interest in taking Whatsapp in the direction of WeChat and turning it into a “super-app”.

But how is Facebook going to turn Whatsapp into WeChat?

Because of its sheer size, Facebook cannot acquire any US companies without raising antitrust concerns. So what did it do? It looked internationally. More specifically, it looked in WhatsApp’s biggest market: India (Singh, July 2019).

On April 22nd, Facebook bought a 9.99% stake in Jio for $5.7 billion, making Facebook the largest minority stakeholder (Singh, April 2020). Jio is an Indian telecommunications company and is a subsidiary of Reliance Industries (RIL), a conglomerate that owns retail stores, music streaming, payment services, content creation, and more.

Why did they do this? In a statement, Facebook said that buying a large stake of Jio would enable them to create “new ways for people and business to operate more effectively” (Fischer, April 2020). According to Fischer, this effort would start by combining JioMart (online commerce app focused on small businesses) into the Whatsapp app. Combining both apps would fuel an internet-revolution among India’s small stores, arming hundreds of thousands of businesses with fast, secure mobile payment systems and online ordering capabilities and consequently making the entire sales process more efficient and increasing the market reach of all stores. Facebook giving these small businesses the tools necessary to catch-up with e-commerce without attempting to replace them. This is the crucial insight Amazon did not recognize when it attempted to penetrate the Indian market: the small, independently owned stores are the bread-and-butter of the Indian retail market and cannot yet be replaced.

By buying a stake of Jio and leading the digital commerce revolution in India’s small stores, Facebook is effectively creating its own market. Giving their own payment/e-commerce tool to hundreds of thousands of small businesses will create a cycle of demand for their product: as businesses adopt the WhatsApp payment system, so will individuals, and doing so will convince more businesses to adopt it, etc. This cycle will iterate and will continuously build demand for their product, at which point Facebook will implement additional features.

What does this mean for the future?

Following this strategy, I hypothesize that WhatsApp will implement JioPay into WhatsApp and push it to all businesses across India. As people become accustomed to paying via WhatsApp, Facebook will start rolling out additional features. I hypothesize that the second feature WhatsApp rolls out is the ability to stream Jio content within the app. After all, this makes sense: India’s internet connection is primarily mobile and Indians mainly use the internet to watch videos (Iyengar, CNN). Doing so would effectively turn WhatsApp into the “everything app” of India, i.e. the Indian equivalent of WeChat. From there, my guess would be that Facebook will choose to test out these features into other emerging markets. I do not think that these features will take-off in the United States as the online-payment market is already saturated (Apple Pay, Google Pay, Paypal, etc.).

What do you think?

Do you think that Facebook’s strategy is to turn WhatsApp into the WeChat of India? If it did so and is successful, do you think that this success could be replicated on the international market?

If WhatsApp becomes a direct competitor to WeChat (on an international scale), could this further accentuate the bi-polar world we live in? Could this bi-polar model become irrelevant as India experiences an internet revolution?

There are arguments to be said about Facebook integrating all of their platforms to escape anti-trust measures rather than attempting to build an “all-inclusive” app. Do you think Facebook fears anti-trust measures more than anything else?