What Does WhatsApp Buy Mean for Facebook in China?
Facebook, blocked by the Great Firewall since 2009, announced yesterday its imminent $19 billion acquisition of popular messenger service WhatsApp. Available in China, WhatsApp trails in popularity to domestic Tencent’s Weixin (WeChat) app. While much has been written recently about Weixin’s rise in China (and the parallel fall of once-massively popular social media service Sina Weibo), some are wondering if the WhatsApp purchase might allow Facebook long-awaited access to the Chinese market. From PCWorld:
It might not have figured in Facebook’s calculations, but its deal to buy WhatsApp may help the social networking giant get access to the Chinese market.
[...] Facebook has previously said it has been examining its entry into the Chinese market. But authorities in the nation control sensitive content on social networking sites, either through deleting user posts, or blocking access to the services.
[...] “Weixin is so well-established in China,” said Mark Natkin, managing director for Marbridge Consulting. “It continues to gain strength as Tencent expands the platform into far beyond mobile instant messaging, but into e-commerce, e-payment, and gaming and a variety of other areas.”
[...] “I think trying to enter and compete in China in the mobile instant messaging market would be very challenging,” he added. In addition, Facebook would have to overcome any regulatory concerns Chinese authorities might have with the product, he said. [Source]
In a South China Morning Post blogpost, Doug Young compares the use of WhatsApp and Weixin in China. When speculating what Facebook’s purchase means for its presence in China, he also stressed the company’s need to tread carefully in light of heavy competition from Weixin and inevitable government scrutiny:
[...] As a user of both WhatsApp and WeChat, I can personally testify that the former is a relative non-player in China, while the latter has become an instant messaging giant in its home market over the last 2 years. I use WhatsApp to communicate with many of my friends outside China, and use WeChat to stay in touch with nearly all of my China-based friends.
[...] In terms of functionality, I do think that WeChat is a bit better than WhatsApp. One of WeChat’s most popular features is a Facebook-like function that lets people share photos and links with their friends, and WeChat also has several GPS-linked features that WhatsApp lacks. In my view, WhatsApp’s biggest potential attraction for Chinese users is the fact that it’s not based in China, and therefore is less likely to raise suspicions that it monitors its users for politically sensitive content.
[...] So the new question becomes: How is the WhatsApp acquisition likely to change Facebook’s China approach? My guess is we won’t see any major moves on the China front this year, as Facebook will be more focused on integrating WhatsApp with its own operations. But we could see some quiet promotions by WhatsApp targeting Chinese users as soon as next year.
If Facebook takes that approach it will need to be careful, since Beijing can easily block access if it feels threatened by the service. I did a quick poll of a few of my friends who follow the space, and all agree that WhatsApp is unlikely to be blocked if it takes a careful approach and remains faithful to its core function of letting individuals communicate on a one-to-one basis. If WhatsApp can do that and steer clear of other politics, it might be able to find a limited but lucrative audience of Chinese white collar workers attracted by the app’s more international image and exposure. [Source]
In A post from Quartz compares WhatsApp and Weixin, noting their competition for presence in international markets:
The world’s most popular messaging apps are mirror images of each other. WhatsApp, purchased by Facebook on Wednesday for $19 billion, prides itself on doing one thing well—offering a messaging service free of ads, games, and gimmicks. Its China-based competitor WeChat, owned by internet giant Tencent, strives to be everything at once: a platform for chatting, shopping, gaming, and even banking. Users can send a Lunar New Year’s “red envelope” of digital cash, buy a soda from a vending machine, book a doctor appointment or hail a taxi.
The comparison extends into politics and geography too: WeChat, like all social media in China, is heavily monitored by the government; WhatsApp, whose Ukrainian co-founder seems to have an anti-totalitarian bent, doesn’t even collect user information beyond a phone number. WeChat, with about 300 million users, is the most used-app for millions of Chinese users in the world’s biggest telecom market (where it’s known as Weixin) and is making inroads in southeast Asia and South Africa. In contrast, WhatsApp, with 450 million users, is strong in Western markets like the US, Europe, and emerging markets like Brazil, Mexico, and India.
[...] In terms of making money from its users, WeChat comes out on top, according to Chao Wang, an analyst with Nomura International in Hong Kong. In contrast to WhatsApp—whose main revenue source is an annual subscription fee of $1 after one free year of use—WeChat makes money by selling games and integrating online payment functions that encourage shopping through the app. ”WhatsApp is kind of lagging,” Wang tells Quartz. “Even if WhatsApp’s user base is bigger, average users spend more time on WeChat.” [...] [Source]