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News
26.02.2019

How big is: TenCent’s WeChat

As part of a series in which Future-tech investigates the secrets behind the world’s largest technology and service providers, next up is Chinese app of all trades, WeChat.

Imagine an app that combines WhatsApp’s messaging, social media elements of Facebook, online commerce of Amazon, transportation network of Uber and even features its own inbuilt integrated payment function, like PayPal. Chinese super app WeChat manages to achieve all of that and more.

Created in 2011, WeChat started life as a simple messenger app, like its western equivalents but has since evolved over time to suit the needs of over a billion monthly users. In terms of its popularity and monthly users, WeChat finds itself behind only WhatsApp and Facebook.

Rather than simply offering messaging, WeChat has been designed as its own mini eco-system featuring a variety of apps: from social media where users can post pictures to others offering the ability to book plane tickets.

Who is Tencent?

The brains behind the goliath app is multinational investment holding company, Tencent. To put the company into perspective, they are the fifth largest internet player on the planet and the largest gaming company in the world.

Founded in 1998 by Ma Huatag, Zhang Zhidong, Chen Yidan, Xu Chenya and Zeng Liqing, Tencent was initially created to meet the growing demand of internet cafes springing up in China. The founders, however, quickly saw an emerging market and demand for a messaging app.

Surprisingly, in the early years Tencent was unprofitable but this did not dissuade South African multinational investment company Naspers buying a 46.5 percent stake in 2001. This turned out to be a very astute investment by the firm: Tencent now ranks as one of the largest companies in terms of market capital in Asia. More recently in 2017, the company became one of five companies to surpass $500 billion in market capital, further exceeding Facebook’s market value ten days later.

Tencent WeChat App, Tencent Business Strategy

Tencent is not limited to just its communications, with a number of columns helping to diversify Tencent’s growing portfolio. The multinational investment company invests heavily in a wide range of areas, including entertainment with Tencent Pictures, information and news, and gaming. This included a recent 40 percent investment into Epic’s Games which has seen unprecedented success with its battle royal game, Fortnite.

Nor is it just games that lie at the heart of the company’s future expansion plans. Tencent has also invested a 5 percent stake in electric car manufacturer Tesla and also recently announced plans to invest in flying cars, building on its recent investment into developing drone technology with partner company, Rapoo, back in 2016.

Even asteroid mining start up, Planetary Resources, has benefitted from $21 million from investors, including Tencent.

Big Brother

With such a market dominance in one country, it raises the question of whether there is more to WeChat and its one billion strong following than meets the eye?

To start, the relationship between WeChat and the Chinese government cannot be ignored.

When the app was being developed, the Chinese government subsidised WeChat and continues to this day. Furthermore, apps such as Facebook Messenger and WhatsApp have been banned in China by the government, essentially removing all major competition in one fell swoop. People entering China are also encouraged to download WeChat as they will not be able to access these apps while they are in the country.

There would appear to be a social price to pay for the wonder that is WeChat. In 2016, the Amnesty International report on user privacy, scored Tencent 0 out of 100 for WeChat’s lack of freedom of speech and end-to-end encryption.

In recent times there have also been a number of reported cases where the Chinese government and authorities have accessed deleted messages on WeChat.

In May 2018, Chinese authorities revealed they have the capacity to retrieve WeChat conversations as part of an investigation. This led to Tencent releasing a public statement saying: “WeChat does not store any chat histories — they are only stored on users’ phones and computers.”

WeChat can also be seen to comply with the Chinese’s government requirements in regard to censoring certain topics and promoting others.

WeChat App

Electronic ID

This appears to be only the start, as WeChat seems poised to take on a new role for the Chinese government. Plans are afoot to move to an electronic ID system using face scans and fingerprint identification, all orchestrated using the app.

China has also proposed a social credit rating system that will track all users’ activities. The system would be able to track online purchases, content you view to even the tone of your messages. Users will then be granted access to certain schools and housing depending on their social credit ratings.

“An important feature of Chinese social monitoring is that China has become a country of ubiquitous in-app electronic payments,” says Salvatore Babones, associate professor of sociology at the University of Sydney and contributor to Forbes on Asia’s role in the global economy. “Of course, we in the West are all subject to mass monitoring as well, but we are monitored for commercial purposes, not usually for security purposes.”

WeChat’s main competitor, Alipay, already uses a credit system called Sesame Credit. It does everything that the WeChat system proposes, offering rewards but also penalties to certain users. Known as being blacklisted, users can no longer buy certain plane tickets, are restricted to using certain trainlines and are limited in terms of housing and loan availability.

“When Chinese people share on WeChat, they are very well aware that their communications are subject to government, as well as company, monitoring,” adds Babones. “They have become very clever at beating the system through the use of puns and jokes, but that doesn’t change the fact that their government is monitoring them — and their purchases.”

While to western users this may seem like a complete invasion of privacy, in China it appears to be expected. There even seems to be a certain comfort in knowing someone is watching your every move as you surf the internet.

Data Centre

Data centre growth

With over a billion monthly users both in and outside of China, how does Tencent keep up with the sheer demand of data transferring and in need of backing up from its users around the world?

In 2017 Tencent added five new data centres, most significantly one in Silicon Valley as part of a move to target cloud users outside China. The other centres in Frankfurt, Mumbai, Seoul and Moscow are part of a plan to encourage Chinese companies to expand outside of China.

The Tencent Cloud already has many data centres spread across mainland China and has already expanded to Hong Kong and Toronto. The company announced that sales in its cloud service, from which WeChat operates, more than tripled year on year as the number of enterprise accounts and pre-existing account increased.

In answering the question, ‘How big is WeChat’, the answer is enormous. And this is only the start. In the space of just eight years, WeChat is rivalling Facebook and WhatsApp in terms of monthly users but offers so much more to its customers.

Facebook may be currently wrestling integration of its messenger, WhatsApp and Instagram apps, but WeChat has been offering a slick and popular combination for years.

Concerns remain over privacy, but this is an app that is looking to take the world by storm, and it just might do it.