“The top four messaging apps boast more than four billion active monthly users.”
“With WhatsApp, which it acquired for US$19 billion in 2014, and Messenger, Facebook is the global market leader.”
Facebook and Tencent are both veterans of the battle for social media supremacy, so it’s no surprise they are ahead of the game when it comes to messaging apps. The first step on the road to success, as both companies grasped long ago (in tech terms), is realising messaging apps are not just about messaging.
When it comes to interacting with friends and colleagues, WhatsApp, which has all but wiped out SMS, is well ahead of the competition. But despite the launch of WhatsApp Business, an Android app aimed at small businesses[8], earlier this year, it is primarily focused on its raison d’être—mobile chat.
Messenger, on the other hand, has evolved into much more than a tool for sending private messages to your Facebook friends. In 2014, Facebook created the Messenger mobile app, separating it from its main mobile app, and appointed former PayPal CEO David Marcus Vice President of Messaging Products, a sign that something big was in the offing.
In March 2015, Facebook CEO Mark Zuckerberg unveiled the Messenger Platform, which enables third-party developers to build apps for Messenger, and Businesses on Messenger, a feature allowing businesses to create and share content within the app and users to communicate with businesses. “Helping people communicate more naturally with businesses is going to improve almost every person’s life,” said Zuckerberg[9].
In 2016, Facebook announced it would allow businesses to build bots on the Messenger Platform to provide automated customer interaction[10]—and Messenger’s capabilities continue to evolve. Recent developments include a Messenger chat plug-in for businesses’ websites[11]; Discover, a tab allowing users to discover new chatbots[12]; the introduction of AR; and M Translations, a tool to translate messages into users’ default languages[13].
Earlier this year, Apple, the world’s biggest tech company, launched Business Chat, a new feature for iMessage that allows users to interact with businesses—a sure sign that messaging apps are growing in importance.
Facebook’s transformation of Messenger is impressive, but commentators have been even more wowed by the success of Tencent’s WeChat.
“It has become integral to the daily life of many in China, especially in the cities,” according to BBC reporter Simon Atkinson[14].
For tech analyst Ben Thompson, “There is nothing in any other country that is comparable, particularly the Facebook properties (Facebook, Messenger, and WhatsApp) to which WeChat is commonly compared. All of those are about communication or wasting time: WeChat is that, but it is also for reading news, for hailing taxis, for paying for lunch (try and pay with cash for lunch, and you’ll look like a luddite), for accessing government resources, for business. For all intents and purposes WeChat is your phone, and to a far greater extent in China than anywhere else, your phone is everything.”[15]
Back in 2015 Facebook’s David Marcus declared, “The messaging era is definitely now.” [16]. He was right.
This story is designed to throw an everyday lens on some of the issues being discussed and debated by investors across the world; it is not research, so please do not interpret it as a recommendation. However, if something has piqued your interest and you would like to find out more or discuss what investments might be suitable for you, please contact one of our Investment Managers on 020 7337 0777.
