If you have been following the twists and turns of the ongoing saga of world’s richest man Elon Musk’s US$44 billion ($60.4 billion) purchase of microblogging platform Twitter, you may be struggling to keep up with what exactly he would do with it once he owns it. As it turns out, Musk, who originally said he wasn’t looking to make money from the purchase and was interested mainly in defending free speech, now feels that the best way to derive value from Twitter might be to turn it into a superapp with payments at its core.
While you in Asia may have heard a lot about WeChat, the all-purpose superapp owned by Chinese Internet giant Tencent Holdings, most Americans and Europeans do not have anything close to a superapp. A superapp is a single mobile app that offers basic services including chat and payments, alongside a suite of “mini-apps” from third parties, ranging from stores and restaurants to government agencies. WeChat is the everything app — wallet, social media, messaging, food ordering, music and video streaming, bill paying, gaming and a lot more.
“If you’re in China, you kind of live on WeChat,” Musk said on a recent podcast. “It does everything — sort of like Twitter, plus PayPal, plus a whole bunch of things, and all rolled into one, with a great interface. It’s really an excellent app, and we don’t have anything like that outside of China.”
Developed markets like North America, Europe or Japan may not have a superapp, but emerging markets in Asia and Latin America have plenty of imitators or WeChat wannabes — like Singapore’s ride hailing firm Grab Holdings; Indonesia’s e-commerce player GoTo Gojek Tokopedia; Shopee’s owner Sea; Indian fintech player Paytm; PhonePe, the fintech arm of Walmart’s Indian e-commerce subsidiary Flipkart; Latin America’s e-commerce and payment giant Mercadolibre; and Brazilian payment player PagoSeguro.
One app to do them all
What makes a multi-purpose app a superapp? Prominent tech commentator Scott Galloway, a professor at New York University’s Stern Business School, says: “An app reaches super status when it knits together a critical mass of services, making them so easy to toggle across that, even if they aren’t as good as sole-purpose apps, the app becomes the operating system for your digital life.”
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What makes WeChat sticky is its chat or messaging platform. And what adds to its stickiness is its payments platform. The combination of the two helped catapult WeChat to become the top app in China. Tencent then added an array of services like music streaming through Tencent Music Entertainment and video streaming through iQiyi.
WeChat is now by far the most used piece of software on the planet, way ahead of productivity software like Microsoft Office. Tencent’s rival Alibaba Group Holding, despite its huge lead in e-commerce, could not recreate a superapp as big or as sticky as WeChat.
For his part, Musk says he would like to turn Twitter into a superapp that would merge its public forum with features like chat, picture and video messaging, Facebook-style news feeds and a variety of other social media functions — including payments as a primary function. Like Twitter, WeChat started off as a social platform, but went viral when it added a mobile wallet and payment features.
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Musk says the superapp he envisages would be “a spam-free thing where you can make comments, post videos … an all-encompassing app that’s everything from a digital town where important ideas are debated” to a payments enabler and everything in between. Just listening to his podcast last week, I got the sense that the new “superapp Twitter” will be more of a media company than, say, Facebook or Google which are part-media companies and part-social media.
The key to building a great superapp is trust. “Where you have a high trust situation, payments, whether it’s crypto or fiat, can make a lot of sense,” Musk said on the podcast. As a new superapp, Twitter would be “maximally trusted and inclusive”, says Musk, who is also a co-founder of fintech giant PayPal.
Are superapps all that desirable? A superapp usually starts with solving one core problem really well and then building an ecosystem around the core offering, notes NYU’s Galloway. A good superapp offers a suite of Internet services on one platform. Take Block, the fintech platform formerly known as Square. Its CashApp enables peer-to-peer payments, crypto and commission-free stock trading. Last year, it acquired Afterpay, which offers “buy now, pay later” (BNPL) services. It also owns Tidal, a music streaming competitor of Spotify and Apple Music. It sold Caviar, its food delivery service, to market leader DoorDash a couple of years ago. And, oh, there is also Square, its core merchant-payment platform.
Rival PayPal tried to buy social media firm Pinterest last year but reportedly broke off talks due to disagreements over the asking price.
Superapps have been aptly compared to the versatile multi-tool Swiss Army knife. Truth be told, I have owned various versions of the Victorinox Swiss Army knife that also has a corkscrew, bottle opener, can opener, screwdriver, key ring, nail file, small ruler — and half a dozen other tools that I can’t remember. It’s a nice useful helper when you can’t find the right tool around the home. It can come in handy during an emergency — but try opening a large tin can with it or using the screwdriver for a daily task. You can’t do everything well with a superapp just as you can’t do everything well with a Swiss Army knife.
So, when someone as well-known as Musk, in the midst of a high profile corporate takeover, says he is buying the microblogging platform because he wants to imitate a Chinese superapp, you may wonder — if the superapp is such a great innovation, why hasn’t the world’s most developed market, with its trillion-dollar tech giants, offered anything like it to customers in their own backyard?
A niche market
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One reason why superapps have had little traction in the developed world is the smartphone duopoly of Apple’s iOS and Google’s Android operating systems. Superapps sit on a smartphone’s screen. Apple and Google are the gatekeepers of the mobile Internet. The last thing they want is to allow some superapp to come in and disrupt their gatekeeper status.
On your phone, you can use your Apple or Google ID to sign in to a range of services. Apple and Google have their own payment systems offering both credit and debit payments. Apple recently introduced its own merchant-payment platform to rival PayPal’s core offerings and has plans to launch its BNPL lending offering later this year. In short, Apple is as much of a fintech player as it is a superapp itself.
In the US, about half the smartphone users have an iPhone. Rival Android has the other half. Globally, Android has 81% of the total mobile OS market while iPhone has a mere 19% share. The iPhone’s closed, well-integrated ecosystem is a built-in repellent to a widespread adoption of superapps in the US.
Superapps have had some traction in Southeast Asia, India and Latin America in part because they are dominated by cheaper Android phones which do not have the closeknit ecosystem advantages of Apple’s iPhone. While the iOS is gradually gaining market share, Android has an almost insurmountable lead because affordable phones made by Samsung Electronics, Xiaomi Corp, Oppo and Vivo are preferred by Indians, Chinese and Southeast Asians compared to the more expensive iPhone.
Other global tech behemoths see themselves as superapps. Social media giant Facebook’s owner Meta Platforms was thought most likely to become the developed world’s version of WeChat. Founder and CEO Mark Zuckerberg, who has grown his social media platforms by aggressively copying rivals like Snap and TikTok or paying over the top for companies perceived as a long-term threat like WhatsApp and Instagram, began copying WeChat in earnest to develop America’s first superapp.
Zuckerberg initially attempted to build it as an ecosystem around Facebook Messenger. Facebook had grand plans for its superapp. It poured billions into building a global payment system. At the apex of that push was the launch of its digital currency, Libra. Last year, the company abandoned Libra to focus on a stablecoin called Diem. Now, it is experimenting with non-blockchain-based digital currencies as a way to expand into e-commerce in the “least regulated way”. Its focus is now on launching digital tokens, dubbed as “Zuck Bucks” by the media, within its apps and its proprietary metaverse.
Meta needs a strong payment system to support its forays in e-commerce. In India, it is trying to monetise WhatsApp through its partnership with Jio Platforms, the digital services arm of India’s largest conglomerate, Reliance Industries. Jio, which has nearly 440 million customers in a nation of 1.4 billion people, has launched an e-commerce platform for small corner stores using WhatsApp messenger.
Still, the deck is stacked against the rise of global superapps. It is unlikely that regulators and policymakers in North America or Europe, or indeed even in South Korea, Japan or Australia, will at any point soon allow a dominant superapp to thrive in their jurisdictions because of all sorts of antitrust problems.
For their part, consumers in the developed world do not want superapps because they will reopen a can of worms surrounding a myriad of data privacy issues. If, for some reason, an American tech giant could somehow manage to morph into a superapp, European regulators like Denmark’s Margrethe Vestager will be ready to pounce on them for data privacy issues.
That brings us back to the bigger question of whether superapps will survive in China and Southeast Asia, or — to put it another way — whether they will be allowed to thrive in their own geographies. In the end, it will all come down to what regulators in the region will do. How much data will they allow superapps to collect? How will the data collection be policed?
Essentially, the superapps are private data collection utilities. Across Asia, and indeed even in China, there are private utilities like electric power producers but they are heavily regulated. Independent power producers were huge money spinners until regulations caught on. I believe that five or 10 years from now, Tencent’s WeChat will be a more regulated and much less profitable player than it is today.
Superapps have a role to play in the region’s digital economy and it is unlikely they will go away soon, but anyone betting on them to be the next money-maker should look no further than the iconic Swiss Army knife. It’s nice to have and handy in emergencies, but even Victorinox, the world’s biggest maker of the device, also makes watches and fragrances, and is still a niche player, not a powerhouse.
Assif Shameen is a technology and business writer based in North America
