With automation and digitisation on the rise, numerous resourceful industry leaders are being overwhelmed by some of the newest Internet companies.These major players haven’t been willing to give up, and many have invested heavily in following new business models and ways of doing business. Thus, there is a growing interest and focus on exclusive trading practices in digital platform competition. In this article, we will analyse how micro-innovation can help WeChat get out of the ‘innovator’s dilemma’.
Founded in 1998, Tencent is one of China’s largest Internet companies, with businesses in social media, finance, entertainment, news, tools and artificial intelligence.It has developed and marketed two communication applications that affect the majority of the Chinese population in terms of work and life.Tencent’s primary focus was on establishing an online paging system. QQ was developed and launched in 1999, and its features such as voice chat, video, file sharing and mailbox were popular among users. WeChat was then successfully launched in 2011, combining most of the features of QQ. It also has a variety of functions such as instant transfer, WeChat payment, city services,and news.It became an overnight sensation in China, with WeChat installed on basically every smartphone, and was highly recommended and welcomed by users.According to statistics, the number of active accounts has been steadily growing since WeChat was first released in 2011. In 2018, WeChat and WeChat users both surpassed 1 billion. In the second quarter of 2021, WeChat had over 1.25 billion monthly active users from all age groups (Thomala, 2021). Tencent has now grown into an internet giant, ranking fifth among its global competitors with a market capitalisation of US$461 billion (Thomala, 2021).
How WeChat Make Money？
In a fast-changing economy, the ability to innovate quickly determines the longevity of a company’s survival and growth. However, companies are mostly faced with the innovator’s dilemma. Many companies choose micro-innovation, which is progressive, open, grassroots and complementary. In layman’s terms, it is the process of updating an already mature product. For WeChat, there is three-phase. Firstly, the entry period-focusing on the demands of users. WeChat was initially positioned as a ‘free text message with photos’. Compared to its competitors, WeChat focused on differentiation and innovation in terms of the speed of sending and traffic savings etc. Secondly, the growth period – concentrate on the expansion of technology. WeChat added the shake function, which further consolidated the stranger dating model by randomly matching users who were shaking their phones simultaneously. This was followed by the introduction of scanning, which increased the stickiness of the WeChat product. Thirdly, maturity-enhancing the commercial value of the platform. On 9 August 2013, Tencent launched its emoji shop, game centre and WeChat Pay, which officially launched WeChat on the road to commercialisation. WeChat red packet was launched on 27 January 2014, sparking enthusiasm for mobile payments among WeChat users. Most users needed to bind their bank cards, realising the enormous commercial value of the WeChat product with the minor feature of the WeChat red packet. Since then, in March 2014 and May 2015, WeChat has opened up the WeChat Payment to further expand its commercial value in several payment scenarios, including offline.
“Every day, 1.09 billion users open WeChat and 330 million users make video calls; 780 million users enter their Moments and 120 million users post their moments, including 670 million photos and 100 million short videos; 360 million users read public accounts and 400 million users use mini programs.”
—Zhang Xiaolong, founder of WeChat
– Social communication (WeChat, group chat, Moments)
– Public Accounts (news, information information, self-publishing)
– WeChat payment
– WeChat traffic card, life payment and other city services
– Medical health, online medical consultation– Sell airline tickets transportation travel, and drip taxi
– Mini programs (Meituan group purchase, takeaway, e-commerce, games, etc.)
WeChat uses business connections to attract other companies to partner with it. Tencent was channelling more user traffic to its portfolio companies. Tencent invests more capital in consolidating its investor position and achieving traffic growth and capital appreciation. WeChat leverages the user traffic and capital cycle to establish a monopolistic presence on China’s digital platforms. WeChat uses two or more parties creating value – stakeholder capitalism combinatorial innovation’ , which are complementary products and services that combine what already exists on a platform in new ways (Flew, 2021). WeChat connects with Tencent’s subsidiary businesses, such as Meituan Takeaway and DiDi Taxi. It also has an investment in Pinduoduo. It is entering the e-commerce space through Pinduoduo to compete with Taobao and allow Pinduoduo to share links on top of its platform while suppressing Ali’s ban sharing Taobao connections on WeChat. In addition to the specific tactics these large technology companies and brands use to compete for capital, we can also find cooperation between them and the government and some of their business operations.
Under COVID-19, WeChat has implemented a health code that can scan to check people’s health status. It provides information on vaccinations, travel history and medical records. WeChat allows more and more companies or government services to rely on it. To some extent, some of the WeChat products have become an essential platform for daily lives. They will then be given the attributes of an infrastructure (e.g. railway ticketing, traffic enquiries, utility bills). The boundaries between platforms and infrastructure are increasingly blurred. The largest digital platforms are now increasingly becoming ecosystems or separate interconnected elements of content, services, applications and user communities within a single corporate entity (Flew,2021).By analysing WeChat’s business and seeing how specifically it is said to make money from running its business. One cannot ignore that WeChat also works with the government. Platforms work in a complex relationship with the state. They work with the state (e.g. social credit) but are also potential challengers to the state-run banking system. It shows the intertwining of capital and the state and the interchange of data. It also shows the state’s enthusiasm for platforming that serves its interests（de Kloet, 2019, pp251）. WeChat has transformed itself from a simply profitable brand to an infrastructure that involves various sectors and even cooperation with the government.
“WeChat says :WeChat is a lifestyle.”
How does WeChat intend to respond to users’ concerns?
WeChat advertising says, “Advertising can be a part of life”. And so, there are ads in the WeChat Moments. There is nothing wrong with the ads, but it exposes that WeChat is surveilling its users and invading their privacy. When people accept the authorization regulations, WeChat starts monitoring the user’s data. I often hear people around me complain, “Yesterday I searched for lipstick on Baidu, and today I received a recommendation ad for lipstick on WeChat.” “I just called to say that the toilet is clogged, and the next thing I’m being pushed is sewer unclogging products by WeChat.” Advertising has gone from ‘widely advertised’ to ‘precisely targeted’. They say that the purpose of collecting your information is to provide you with a better service. Companies like Amazon, Facebook and Google also use targeted advertising and gather information about their users as a mainstream practice, industry practice and a trend.
“Nick Srnicek(2016) considers that at the heart of platform capitalism lies the extraction of more data, that by fully profiling users, large platforms can further broaden their business and become monopolies, and that machine learning fed by massive amounts of information means that the AI technology of monopoly platforms enables them to pursue more profits and power.”
(pixabay, 2020，Attribution 4.0 International (CC BY 4.0))
They collect large amounts of content and user data, provide third parties with access to detailed data, and use algorithms to automate instructions to transform input data into output data. They use the data to add money, attention, and user engagement (Flew,2021). So how is user privacy guaranteed? What measures are taken by the platforms to protect user-information from inappropriate use or disclosure by platform insiders? Who regulates the collection, storage and use of user information by the platform? Platforms are becoming somewhat opaque, with hidden algorithms, business models, and data flows that the population is not open to control (van Dijck et al. 2018, pp. 28-29). What’s more, when targeting a specific group of users, targeted advertising inevitably excludes other user groups. Is it possible that the exclusion of user groups discriminates against gender, ethnicity, sexual orientation, religious beliefs, the presence or absence of disabilities, income and education levels, etc. There is an algorithmic bias, and it is a manifestation of systemic oppression (Noble, 2018). As the WeChat slogan goes, WeChat is a way of lifestyle. Is this way of life equal? With the upgrading of WeChat and more people around us using it, people seem to rely more on WeChat than any other software. WeChat, with its increasing functional complexity, is friendly to older people? There is age discrimination with WeChat’s increasingly youthful target group, which means that older people are marginalised. These are the kinds of social issues that are waiting to be addressed by the WeChat team.
Innovation in Internet companies should analyse the consumer market, providing a more flexible and practical approach to product development and service delivery in critical technologies. The case study of Tencent WeChat shows that innovation strategies. There are several effective implementation paths for companies: innovation should be highly focused on the user experience, the development of underlying application technologies, strengthening resource integration capabilities, and leveraging third-party platforms or cross-border businesses to increase impact. WeChat has done a good place of micro-innovation, making the company a success. However, it is also essential to pay attention to the scale of user data collection and commercialisation so that WeChat can stand out from the crowded platform economy.
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