Today, We will discuss the development towards universal service platforms in the current platform landscape. First you might wonder, what is a platform? A platform is products and services that bring groups of users together in two-sided networks, which provide infrastructure and rules to facilitate the two groups’ transactions.
Universal Service Platform
Do you think it is possible to fit an entire nation’s economy into a single smartphone application? In the economic giant china, this is soon becoming the case. The Chinese app WeChat is such as your Facebook, Skype, Uber, Paypal, and Tinder. It is the world’s first truly universal service platform.
Since its launch in January 2011, WeChat has acquired 700 million users, the equivalent of twice the population of the US. Following the success of WeChat, other western platforms started to mimic its features, and started to offer more and more functions via its original purpose. WeChat has been the leader and trendsetter of universal service platforms since 2011.
Facebook as a Universal Service Platform?
Since its launch in 2007, the Facebook platform’s initial aim at providing the framework for social networking services has changed and evolved over the years.
David Marcus (VP of Facebook messenger) recently has openly expressed his envy for WeChat by calling it simply ‘inspiring‘ and at the same time announced his plans to ‘transform messenger into a platform where people can communicate with business and buy things’. By early 2016, more than 700 apps have been plugged into Facebook messenger.
Will WeChat expand their market?
WeChat has only invested small efforts to expand beyond their primary market. What will happen if WeChat decides to increase their expansion? Does WeChat pose a credible threat to other players in markets outside China as for example the United States or Europe?
While there is no definite answer to that question, there are several points that speak for or against envelopment:
WeChat has gathered a lot of experience. This knowledge certainly gives them an advantage over most of the other platform providers, who are more experts in one particular functionality.
On the other hand, the app ecosystem in the West is already advanced. WeChat’s success in China can largely be attributed to the dispersed and less-advanced app landscape that allowed them to emerge as the dominant player. As a new market entrant to the Western market, WeChat would need to overcome the strong network effects, which all the dominant players exhibit in their respective fields.
So?
If we take a look at the current developments of some big platforms, there is clear evidence that the trend goes towards universal service platforms. The more services and functionalities are offered by the same platform, the more benefits users can extract from it. This goes without incurring extra switching costs while changing between multiple platforms. Also from the provider side, offering a new feature is likely to complement an already existing feature, for example the ability to pay with an app.
It will be interesting to see if, sooner or later, WeChat will increase their expansion in the West and how the other players will respond. For now, Facebook and Co. still have a long road ahead from becoming a true universal service platform.
References:
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