If you follow the tech world, you’re probably familiar with the Chinese giant Tencent. They are the largest Chinese tech company with a market cap of $376 billion and they have their arms in everything from gaming and social media to payments and investing. But likely their most notable product is their super app WeChat.
WeChat is basically ubiquitous with a total of 827 million users within just China. And this ubiquity isn’t surprising given that WeChat attempts to do everything. You can buy groceries, book planes and hotels, make payments, message people, read the news, get food delivery, have a video call, play video games, and basically whatever else you want.
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For years, American companies have looked at WeChat with pure envy as they too want a super app that encompasses every aspect of people’s lives. And it seems that the latest tech billionaire to jump on this bandwagon is Elon Musk who wants to turn X into an everything app. He says that for X to succeed, the platform needs to compete with YouTube, LinkedIn, Facetime, dating apps, and for some reason, the entire banking industry.
Given that Elon has basically infinite resources, actually developing such an app and putting in front of people would not be too difficult, but actually getting people to use it, well, that’s a whole nother story. Google, Facebook, and Apple have been trying to do this for over a decade now, slowly expanding to one industry after another.
But to this day, they’re all very much dependent on their hero product. 58% of all of Google’s revenue for example still comes from search ads. 52% of Apple’s revenue still comes from the iPhone. And 96% of Meta’s revenue still comes from just Facebook and Instagram. And that’s despite these companies expanding to dozens and dozens of sectors and industries often betting as much as $100 billion.
Clearly, infinite money and resources haven’t allowed any of these guys to create a true super app. So, here’s why a super app has never worked in America and why X won't be any different.
PUBLIC HESITANCE
Likely the biggest factor preventing a super app from blowing up in America is public hesitance. The majority of the public already feels that big tech has too much power and they feel no need to start using even more offerings from any one of these companies. And whenever a big tech company tries to push such a vision, people not only tend to not buy in but often resist.
Likely the best example of this was with Google+. If you’re not familiar with Google+, it was basically Google’s attempt to take on Facebook and create their own social media platform. They were relatively early to social media as well given that the network launched in mid-2011.
On paper, Google+ actually started off pretty strong. Within 2 weeks of launch, they got 10 million users. Within a month, they had 25 million users. And within 2 years, they had over half a billion users. Surely, this was a massive success, right? Well, that is until you peel back the layers.
You see, while Google was able to get a bunch of users on board, these weren’t exactly excited or loyal users. Rather, Google+ was forced onto these users. For example, Google made it nearly impossible to open a Gmail account without creating a Google+ profile. They also locked a bunch of useful functionality behind a Google+.
If you wanted to see reviews from your friends, you needed Google+. If you wanted to see the leaderboards on the Play Store, you needed Google+. If you wanted to use Google Hangouts, you needed Google+. Likely the worst infraction though was when Google required users to have a Google+ account to leave comments on YouTube.
This move generated so much backlash that one of YouTube’s founders, Jawed Karim, came out of his 8-year slumber to say “Why the f do I need a Google+ account to comment on a video?” All of this backlash would lead to Google rolling back many of these policies, but it’s not like things would’ve played out any differently even if they didn’t roll these back.
The reality was that while they were able to get over half a billion accounts, 90% of user sessions lasted less than 5 seconds, and Google would eventually end up shutting down the platform in 2019. Now, you might be inclined to say that this failure was largely just because Google didn’t understand the social media space, but honestly, I don’t think that would’ve made much of a difference which brings us into our next example: Threads.
I think we can all agree that Meta is the undisputed king of social media with multiple platforms with billions of users each. So, you would think that they would have a great shot at taking down Twitter, especially given the poor optics after Elon’s takeover. And to Thread credit, they did have an insane launch reaching 100 million users within just 5 days.
But, this was followed by an explosive fall as well as Threads would lose 80% of its daily active users within just 1 month. And Google+ and Threads are just 2 notable examples. There are plenty of examples of this across tech such as the Microsoft Zune, the Windows Phone, Bing, Edge, the Google Pixel, Google Meets, Google Classroom, Bing Maps, Google Bard, and on and on and on.
It seems that these tech leaders think that people will be super ecstatic about having yet another big tech account or service. They expect people to be like “OH WOW! I can do Twitter on Threads now??? This is a game-changer. I can’t wait to ditch Twitter.” In reality, people are more like “Oh cool, Meta has a new app now? I’ll check it out.” None of this is to say that these companies can’t launch a successful product in an adjacent or even completely different industry.
But the bottomline is that these company’s resources and ubiquity don’t exactly make it any more likely that these new products succeed especially on the scale that you would expect from these companies because it’s only these companies and their leaders who are jumping up and down about the idea of a super app.
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LACK OF KNOWLEDGE
Sometimes, big tech can overcome the odds and launch a new successful widely used product in a completely different industry. But they’re not home-free yet because now, they have to make the venture actually worthwhile which is an even bigger challenge. Likely the best example of this is Apple’s foray into the financial industry.
In early 2019, Apple announced that they were gonna launch a credit card. A credit card that easily integrated into the Apple ecosystem, came with a beautiful UI and encouraged strong financial habits. From the very beginning, credit card enthusiasts weren’t a big fan of this card. While they didn’t have anything particularly bad to say about the card, they simply felt that there were better options on the market in terms of rewards and benefits.
But despite their concerns, the Apple card would go on to be a massive success amongst the general public growing to over 6 million card holders. It turns out that the average person far preferred the simplicity and convenience of the Apple Card over maximizing credit card points with Amex or Chase.
And that’s still the case to this day, people still really like the Apple Card. The same, however, cannot be said about Goldman Sachs, the issuer of the Apple Card which has lost over $1 billion largely due to Apple’s lack of understanding of the credit card market.
You see, Apple largely approached the Apple Card with the tech mindset and that’s largely why it was so well received but this was also the card’s biggest pitfall. For example, with tech, you want your products to be as widely accessible as possible. That’s why Apple kept the credit requirements for the Apple Card super low.
They wanted it to be as easily accessible as possible and make it easy for first-time credit card holders to build their credit. But, while that’s a great sentiment, it also led to a quarter of their credit card loans going out to people with credit scores below 660 leading to the worst bank loss rate of any big US card issuer.
But not only is the Apple Card losing money on its subprime customers but they’re also not making any money on their good standing customers. Thanks to Apple’s Card's great UI and insistence that you pay off your credit card bills, making money on good-standing customers is also nearly impossible. This isn’t to say that Apple has to be predatory to make money.
Many Amex cards, for example, don’t even allow customers to carry balances, but Amex is still able to make a bunch of money from these customers because they charge annual membership fees and have other modes of monetization. Apple, however, is stuck in a very tricky situation.
Their subprime customers are defaulting left and right, credit card enthusiasts don’t want anything to do with the Apple Card, and their average customers always pay off their entire balance and never pay any interest. Yeah, I don’t think you’d be surprised to hear that Apple has agreed to end its credit card and savings account partnerships with Goldman Sachs.
But honestly, I don’t think Apple could’ve really avoided this fate. The reality is that it takes time to truly understand and compete in an industry such as credit cards. Immediately launching to 6 million card holders many of whom have never had a credit card before is bound to cause issues which brings me to the fundamental difference between China and America.
A FREE MARKET
I don’t want to get too political here but the reality is that launching a product in America and China are very different. For a product to truly be successful in China, you very much need the blessing of the CCP which companies like Tencent already have. And that’s why they’re able to expand to any industry or sector with ease.
They’re often the biggest player in that industry or they’re even the first player in that industry. This makes capturing market share a walk in the park but it’s completely different in America. When an American company tries to create a super app and expand to different industries, they’re competing with highly established and competitive players and brands.
Apple for example was taking on American Express, Chase, Citi, Capital One, and all the other big banks. But, we don’t even have to look into a different industry. This is true within the tech industry itself. With Google+, Google was competing against Meta. With Bing and Edge, Microsoft was competing against Google.
With the Windows Phone, Microsoft was competing against Apple Google, and so on. Any industry that these guys want to expand to is already dominated by one of their biggest rivals and unless these guys let up or drop the ball for some reason, expanding here is nearly impossible.
So, ironically, one of the biggest factors preventing a Tencent-style monopoly is the big tech oligopoly. None of them are going to let the others eat their lunch. But even putting that aside, Americans simply aren’t interested in super apps. In fact, they actually like having separation.
Take the financial industry for example. You can have basically any one of your financial needs taken care of by Chase Wells Fargo or any one of the big banks. But the average American doesn’t just have 1 Chase account, they actually have 25-40 financial accounts.
They have a few checking accounts, a few savings accounts, 1 or 2 HSA accounts, a couple of credit cards, a couple of payment platforms, a couple of investing and trading platforms, a few loan providers, and a few financial management software providers.
The reason being that one they like separation, and two, each account is good a something specific whether that be investing or credit cards or mobile payments or whatever. It’s the same thing with tech. People have their favorite social media apps, their messaging apps, their streaming services, their games, their browsers, their emails, their operating systems, and so on.
Americans tend to choose the one they like the most from each sector to create an assortment of tech services that let them enjoy the best of all words like a true free market. And until that changes and Americans want a product just because it's from X or Meta or Google or whatever, big tech really has no chance of creating a true super app
