Elon Musk is renaming his Twitter platform as “X” and aims to develop a comprehensive application that combines financial management and social networking, allowing users to handle all their financial transactions alongside their social interactions.
His inspiration is China’s WeChat, which dominates the Chinese Internet with chat, payments, games and many other functions in its walled garden.
Musk has hinted that such an “everything app” is his goal for the X platform, but experts believe he will struggle.
– What is WeChat? –
China’s big tech giant Tencent released the app in 2011 to replace an earlier desktop chat program called QQ.
Used by almost everyone in China, it weaves together messaging, voice and video calls, social media, mobile payments, games, news, online booking and other services.
It crossed the billion account mark in 2018 and most of its users are located in mainland China.
– Is it something like Twitter/X? –
No. Twitter or X is much smaller and more limited in functionality. China has its own Twitter equivalent, called Sina Weibo.
“Sina Weibo is also one of the largest social networks in China, but it serves a very different function than WeChat,” said Kendra Schaefer, director of technology policy research at analysis firm Trivium China.
“It’s not that critical to everyday life, people don’t pay to use the platform. They primarily just use it to browse threads.”
– How did WeChat become so dominant? –
Back in the 2000s, before the era of smartphones, China’s Internet sector was a place of feverish experimentation with very little regulation.
Kai von Carnap of Merics, a German think tank specializing in China, said the Internet sector “had an absolute Wild West free market economy.”
“No labor protection or data protection or competition rules,” the analyst said.
Tencent was one of those who tried and succeeded where thousands of others failed.
Crucially, Tencent was able to attach a payment system to QQ, which it eventually went on to build for WeChat — something that innovation watchers say is crucial for the super app.
Musk has repeatedly talked about adding payment functionality to Twitter, even suggesting it could “become half of the global financial system.”
– Will Musk succeed? –
Tencent operated in a very different atmosphere when it forged its early success.
Many millions were unbanked in China and debit cards were rare, but people quickly adopted mobile phones.
“And then those phones quickly became their wallets,” Schaefer said.
There aren’t that many “unbanked” people in the U.S. these days, and credit cards are accepted everywhere — which makes Schaefer and others wonder why anyone should use Musk’s app to pay for anything.
– Could Musk even use a payment application? –
Regulators in Europe and the United States appear to be less tolerant of tech companies with ambitions across sectors.
Regulatory concerns ultimately torpedoed Facebook’s cryptocurrency project.
It seems likely that these regulators would at least be interested in Musk’s ambitions in the financial industry.
“The amount of time that WeChat had to develop without regulation is something that Elon Musk doesn’t have,” von Carnap said.
– Why is Musk so obsessed with the super app? –
There are many theories. Some observers say he is trying to topple the US dollar and reorganize global finance. Others say he simply has no idea what he’s doing.
The X.com name dates back to 1999, when Musk wanted to start a financial store to disrupt banking.
It didn’t take off and was merged into a company that eventually became PayPal. Both Musk and his X brand were shown the door.
Author and Musk critic Paris Marx said the billionaire was “trying to re-run the playbook of his old financial company by grafting it onto a completely independent business”.
“He’s repeating the mistakes of his past by entering an industry he doesn’t understand with his big ideas, failing to listen to feedback, sticking to strategies that don’t work, and treating his employees like garbage,” Marx wrote in his Disconnect. blog.
Schaefer, who doubts Twitter’s success as a financial app, is less blunt in his conclusions about Musk.
“If he’s actually found that adding a strong payment mechanism to a social network is the key to growing a social network into a super app, I think he’s right about that,” he said.
It remains to be seen how successful it will be, but I don’t think the basic idea is necessarily bad.