China

The quiet war to become China’s next WeChat

The app-for-everything dominates digital life in China, but contenders to the throne are sharpening their swords.

The quiet war to become China’s next WeChat

Douyin and its international counterpart TikTok have routinely topped the global chart of the most downloaded non-game app in Apple's App Store since 2018.

Image: Rafael Henrique/SOPA Images/LightRocket via Getty Images

In March, Douyin users in three Chinese cities discovered that the popular short-video app had quietly launched a new Groupon-like feature, a "group buying" feed that allowed users to order takeout, book hotels and reserve tickets and services. It's part of a pattern: Over the past few years, Douyin has beefed up its social network by adding features from livestreaming to ecommerce, from gaming to instant messaging, challenging existing dominant players in each vertical. Now Douyin has expanded into the so-called "local life services," taking on Meituan, a dominant player in this space, which offers a wide range of services meeting users' offline life needs, from food delivery to ticket booking.

It's clear that the young Douyin is not content to be just an entertainment app, however lucrative that may be. Instead, it's one of several Chinese apps engaged in a quiet, high-stakes battle to become the next WeChat, a mega app that now has 1.1 billion monthly active users, 80% of China's total population. In the past decade, WeChat has transformed human interaction in China and grown into an ecosystem for innovation, making it virtually the sole super-app most of China can't live without. The question now is whether anyone can dethrone it.

By nature, Chinese tech companies do not feel encumbered by their "core competencies." And Chinese web users are accustomed to mega apps that do a lot of different things. Tech analysts can't agree on who will take over the throne from WeChat, but they anticipate that WeChat's status as the super app won't survive Beijing's ongoing antitrust drive. This means China may end up with more than one mega app, each favored by different demographics.

Douyin is hardly the only app that's expanding beyond its core business. Meituan is said to be testing a group chat feature. Douyin nemesis Kuaishou is already turning into a communication channel and building a "local life" business center. And a slew of tech companies are adding a mobile wallet feature.

"An app ecosystem that is more diverse is healthy for everyone. Competition creates more innovation and generally more competitive rates and conditions for everyone involved except the tech giants," said Mark Tanner, managing director of Shanghai-based China Skinny, a marketing and research agency. "It will also further build the cottage industries that come from supporting these apps."

Why does every Chinese app want to be WeChat?

It's unsurprising that each popular Chinese mobile app is building a larger footprint, be it a short-video platform, a delivery service or an online marketplace. China's online population growth has slowed after a decade of mobile internet expansion. China now has nearly 1 billion internet users, representing about 70% of the country's total population. Almost every Chinese netizen already uses mobile apps designed by Tencent, Alibaba and Baidu, according to market research firm QuestMobile. In other words, there aren't a whole lot of web users who remain untapped. Afraid of missing the next must-win market, Chinese tech giants tend to add ever more functions to get existing users hooked.

"Failures don't sway them from trying new things, even in ventures that may not make sense to third-party observers," Man-Chung Cheung, a research analyst at eMarketer, a New York-based market research company, told Protocol.

Who will win?

Analysts are generally divided on who's most likely to take the throne from WeChat, or at least share the throne. But some say Douyin is the top contender.

Douyin's not even five years old, but it has already been feuding with WeChat for about three. ByteDance founder Zhang Yiming and Tencent founder Pony Ma were caught bickering publicly on WeChat in 2018; Zhang accused WeChat of blocking and plagiarizing Douyin, which ByteDance owns, and Ma countered that Zhang's accusation was libel. Last year, WeChat launched its own short-video feature, a deliberate challenge to Douyin and Kuaishou. In early February, Douyin brought a lawsuit against Tencent, accusing WeChat of blocking Douyin content.

Meanwhile, netizens are increasingly shifting their attention away from WeChat and toward Douyin, a completely different ecosystem. Douyin and its international counterpart TikTok have routinely topped the global chart of the most downloaded non-game app in Apple's App Store since 2018. Douyin has amassed 550 million monthly active users. Though Tencent's apps, WeChat included, still captured most user attention in 2020, compared with 2019, Chinese smartphone users were spending more time on ByteDance's apps, including Douyin, and spending less time than they previously had on Tencent products, according to QuestMobile.

Douyin is particularly popular among China's youth. Last year, netizens under 30 spent an average of 33 hours on Douyin each month, longer than any other video app. "Douyin is great for discovery and entertainment, while WeChat seems to be where one forms deeper connections and conversations," Cheung said. "I think they are still quite different and there is room for both."

ByteDance is already China's most valuable private company, valued at $180 billion and poised to go public this year. By building an infrastructure for what Douyin calls "interest-based ecommerce" (兴趣电商) and "local life" services, ByteDance expects to see rising revenues and longer usage time. Douyin only dipped into ecommerce in 2019, but has already raked in $76 billion in GMV in 2020, more than tripling its 2019 total, according to the Chinese financial publication LatePost. In January, Douyin's e-wallet pay feature went live. As CCTV's Spring Festival Gala's exclusive virtual red-packet partner (WeChat pioneered this user-acquisition play in 2014 to great success), Douyin doled out a record high $186 million worth of red envelopes during the mid-February holiday, all to attract new users — 70.3 billion interactions, to be exact. In 2020, ad revenue accounted for about 73% of ByteDance's total revenue, and 60% of that was from Douyin. "Local life," on the cusp of becoming a $100 billion market in China, serves as just another opportunity for Douyin to serve ads on behalf of small and medium businesses. Analysts say "local life" services have great growth potential because of their frequent usage.

"[Douyin has] increasingly [wrested] screen time away from WeChat through their AI-driven, intuitive and entertaining user experience, which I expect they will apply to their gaming, ecommerce, payments and other investments to keep users hooked," Tanner said. Although WeChat's No. 1 position in communication is tough to challenge, "based on [Douyin's] current trajectory and additional services, they are on track to surpass WeChat for share of screen time, which in a way makes them the 'next WeChat,'" Tanner said.

But other analysts are not quite convinced that Douyin will replace WeChat as the national app, at least not yet. Douyin's is nowhere near as powerful a communication tool as WeChat, nor Kuaishou. "If anything, the user behavior on Kuaishou initially was very WeChat-like, and even now it encourages much more communication between users than Douyin," tech analyst Rui Ma told Protocol. In terms of social and 'life" services, Ant Financial's Alipay is far more comprehensive than Douyin.

Douyin's ecosystem is too new, and it will take time for users to see it as something more than a time-killer, said Ashley Dudarenok, founder of Alarice, a Chinese social media marketing agency. "I think there will be always WeChat, and there will be a few other players," Dudarenok said, adding that Douyin, its nemesis Kuaishou, Alipay and Meituan are strong contenders to potentially become a super app in a specific segment or for a specific demographic. "I don't think anybody is replacing WeChat."

The fast-growing paychecks of Big Tech’s biggest names

Tech giants had a huge pandemic, and their execs are getting paid.

TIm Cook received $82 million in stock awards on top of his $3 million salary as Apple's CEO.

Photo: Mario Tama/Getty Images

Tech leaders are making more than ever.

As tech giants thrive amid the pandemic, companies like Meta, Alphabet and Microsoft have continued to pay their leaders accordingly: Big Tech CEO pay is higher than ever. In the coming months, we’ll begin seeing a lot of companies release their executive compensation from the past year as fiscal 2022 begins.

Keep Reading Show less
Nat Rubio-Licht
Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

COVID-19 accelerated what many CEOs and CTOs have struggled to do for the past decade: It forced organizations to be agile and adjust quickly to change. For all the talk about digital transformation over the past decade, when push came to shove, many organizations realized they had made far less progress than they thought.

Now with the genie of rapid change out of the bottle, we will never go back to accepting slow and steady progress from our organizations. To survive and thrive in times of disruption, you need to build a resilient, adaptable business with systems and processes that will keep you nimble for years to come. An essential part of business agility is responding to change by quickly developing new applications and adapting old ones. IT faces an unprecedented demand for new applications. According to IDC, by 2023, more than 500 million digital applications and services will be developed and deployed — the same number of apps that were developed in the last 40 years.[1]

Keep Reading Show less
Denise Broady, CMO, Appian
Denise oversees the Marketing and Communications organization where she is responsible for accelerating the marketing strategy and brand recognition across the globe. Denise has over 24+ years of experience as a change agent scaling businesses from startups, turnarounds and complex software companies. Prior to Appian, Denise worked at SAP, WorkForce Software, TopTier and Clarkston Group. She is also a two-time published author of “GRC for Dummies” and “Driven to Perform.” Denise holds a double degree in marketing and production and operations from Virginia Tech.

Hybrid work has some distinct advantages when it comes to onboarding.

Photo: LogMeIn

Jo Deal is the chief human resources officer at LogMeIn. She is responsible for leading global people strategy with a focus on attracting, developing and engaging talent.

The desire for change that sprung up during the pandemic resulted in the highest attrition levels in decades and a fierce war for talent playing out in the market. The Great Resignation forced managers to suddenly make hiring their top priority, and recruitment partners became everyone’s best friend as leaders scrambled to replace key roles within their teams.

Keep Reading Show less
Jo Deal
Jo Deal serves as LogMeIn’s Chief Human Resources Officer. She is responsible for leading global people strategy with a focus on attracting, developing and engaging world class talent by expanding LogMeIn’s reputation as one of tech’s most desirable career destinations, and by providing a collaborative learning environment where employees can grow their careers.
Boost 2

Can Matt Mullenweg save the internet?

He's turning Automattic into a different kind of tech giant. But can he take on the trillion-dollar walled gardens and give the internet back to the people?

Matt Mullenweg, CEO of Automattic and founder of WordPress, poses for Protocol at his home in Houston, Texas.
Photo: Arturo Olmos for Protocol

In the early days of the pandemic, Matt Mullenweg didn't move to a compound in Hawaii, bug out to a bunker in New Zealand or head to Miami and start shilling for crypto. No, in the early days of the pandemic, Mullenweg bought an RV. He drove it all over the country, bouncing between Houston and San Francisco and Jackson Hole with plenty of stops in national parks. In between, he started doing some tinkering.

The tinkering is a part-time gig: Most of Mullenweg’s time is spent as CEO of Automattic, one of the web’s largest platforms. It’s best known as the company that runs WordPress.com, the hosted version of the blogging platform that powers about 43% of the websites on the internet. Since WordPress is open-source software, no company technically owns it, but Automattic provides tools and services and oversees most of the WordPress-powered internet. It’s also the owner of the booming ecommerce platform WooCommerce, Day One, the analytics tool Parse.ly and the podcast app Pocket Casts. Oh, and Tumblr. And Simplenote. And many others. That makes Mullenweg one of the most powerful CEOs in tech, and one of the most important voices in the debate over the future of the internet.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Entertainment

Peloton’s terrible, horrible, no good, very bad year

2022 just started, and Peloton has already halted bike production and is talking about mass layoffs. How did the pandemic darling get here?

How did Peloton go from pandemic star to sinking ship? One answer is the classic problem of supply and demand.

Image: Peloton; Protocol

It’s been a hell of a ride for Peloton. The headlines have been practically nonstop, from 2019’s cringey wife ad to 2021’s series of unfortunate “Sex and The City” events. But in 2020, Peloton could do no wrong. The at-home fitness company saw a 172% spike in sales over the course of that year, buoyed by the pandemic forcing wealthy gym-goers to stay home.

But nothing is ever easy or certain when it comes to Peloton. In the past week, Business Insider reported that Peloton is considering laying off 41% of its sales and marketing staff and closing down stores. CNBC learned that the company has hired McKinsey & Co. to help cut costs. And yesterday, CNBC reported that Peloton is temporarily halting production of its bikes. Peloton shares promptly plunged 24%.

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

Entertainment

Netflix looks to expand gaming with major IP deals, Fortnite-like updates

Remarks made to investors and recent job postings hint at big ambitions for Netflix’s nascent gaming efforts.

Netflix may be taking some cues from games like Fortnite and Apex: Legends for its own video game initiative.

Photo: Cameron Venti/Unsplash

Two months after launching mobile games to all of its members, Netflix is looking to double down on gaming: The company told investors Thursday that it wants to expand its portfolio of games “across both casual and core gaming genres.” Recent job offers suggest that this could include both live services games as well as an expansion to PC and console gaming, and the company's COO hinted at major licensing deals ahead.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Latest Stories
Bulletins