}
SAN FRANCISCO — As Mark Zuckerberg begins shifting Facebook to private messaging
and away from public sharing and open conversations, the vision he has
sketched out for the future of social networking already exists — just
not in the United States.
Instead, it is a reality in China through a messaging app called WeChat.
Developed
by the Chinese internet giant Tencent in 2011, WeChat lets people
message each other via one-on-one texts, audio or video calls. Users can
also form groups of as many as 500 people on WeChat to discuss and
debate the issues of the day.
While
Facebook users constantly see ads in their News Feeds, WeChat users only
see one or two ads a day in their Moment feeds. That’s because WeChat
isn’t dependent on advertising for making money. It has a mobile
payments system that has been widely adopted in China, which allows
people to shop, play games, pay utility bills and order meal deliveries
all from within the app. WeChat gets a commission from many of these
services.
“WeChat has shown
definitively that private messaging, especially the small groups, is the
future,” said Jeffrey Towson, a professor of investment at Peking
University. “It is the uber utility of business and life. It has shown
the path.”
What
is happening in China offers clues to not only how Facebook may carry
out its shift, but how the internet more broadly might change. Many of
Silicon Valley’s tech giants are dependent today on online advertising to make enough money to keep growing and innovating on new services. Some call online ads the lifeblood of the internet.
But
WeChat, which has 1.1 billion monthly active users, shows that other
models — particularly those based on payments and commerce — can support
massive digital businesses. That has implications for Google, Twitter
and many others, as well as Facebook.
WeChat, of course, has its own flaws. The messaging app is heavily censored because of requirements by the Chinese government.
Facebook declined to comment and Tencent did not immediately respond to requests for comment.
Mr.
Zuckerberg didn’t elaborate much this week on how the change toward
private messaging would affect Facebook’s business, which relies on
people publicly sharing posts to be able to serve them targeted
advertisements. In a blog post,
he said Facebook would build more ways for people to interact on top of
messaging, “including calls, video chats, groups, stories, businesses,
payments, commerce, and ultimately a platform for many other kinds of
private services.”
Yet it’s unclear
whether Mr. Zuckerberg can pull all those features off with Facebook. On
WeChat, those services are underpinned by its mobile payments system,
WeChat Pay. Because payments is already tied into the messaging service,
people can easily order meal deliveries, book hotels, hail ride-sharing
cars and pay their bills. WeChat Pay itself has 900 million monthly
active users.
People
also use WeChat Pay to transfer money and to buy personal finance
products. More than 100 million customers have purchased WeChat’s
personal finance products, which managed over 500 billion yuan, or $74
billion, by the end of last September, Tencent has said. Its users can
buy everything from bonds and insurance to money market funds through
the app.
Facebook lacks such a
payments system. So to be more like WeChat, the Silicon Valley company
could have to acquire banking and payment licenses in many countries.
One sign that Facebook has been thinking about payments is its work on a new crypto coin that is meant to let people send money to contacts on their messaging systems.
To
make Facebook a private messaging product, Mr. Zuckerberg may have a
lot else to learn from Allen Zhang, the creator of WeChat. Mr. Zhang is
famous for his perfectionist pursuit of a well-designed service.
“He
is renowned in China’s tech scene as an artist and philosopher, as well
as for his fierce mission against anything that degrades user
experience,” Connie Chan, an investor at the venture capital firm
Andreessen Horowitz, recently wrote of Mr. Zhang.
Mr.
Zhang fought many internal battles when Tencent’s revenue department
pushed to put more ads on WeChat. In a four-hour speech earlier this
year, he pondered the question of why there were not more ads on the
messaging service, especially the opening-page ads that are the norm in
many other Chinese mobile apps.
Mr.
Zhang’s answer: Many Chinese spent a lot of time — about one third of
their online time — on WeChat, he said. “If WeChat were a person, it
would have to be your best friend so that you would be willing to spend
so much time with it,” he said. “How could I post an ad on the face of
your best friend? Every time you see it, you’ll have to watch an ad
before you can talk to it.”
Mr.
Zhang, who has made restraint his product philosophy, has been lucky
because Tencent makes most of its money from online games so that it
does not need to sell ads for revenue.
Tencent
doesn’t break out its revenues from WeChat, but its financial report
for the third quarter of 2018 said that social advertising revenue,
which includes WeChat, grew 61 percent from a year earlier, while the
category called “other businesses,” which includes payment services,
rose by 69 percent.
Mr. Zuckerberg
does not have that luxury, given that he is trying to switch from an
ad-based business into a different model. It will be far from an easy
task to pull off.
“Zuck is clearly
trying to address Facebook’s problems of privacy and fake news, but it
will greatly affect its monetization capability,” said Ivy Li, a venture
capitalist at Seven Seas Partners in Menlo Park, Calif. “How
comprehensive the surgery is going to be and whether the implementation
will be twisted by all kinds of compromises is a big question.”
She
added: “Facebook is trying to seek a balance between a public square
and a private space in an increasingly polarizing society. The final
result could be it will be abandoned by both.”
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