Fear at facebook

Publié le 8 Mars 2014

Fear at facebook

The 19 billion dollars Facebook paid to buy Whatsapp are as much a sign of power as they are a sign of fear… for good reasons.

  • What we know : young people are tired of open social networks and are more reluctant to appear on them. They are adopting apps designed for smartphones : Instagram (also bought by Facebook) to share pictures or Snapchat (which refused to be purchased) to send messages that auto-destruct and leave no traces.
  • What many don’t know: Facebook now has more users on phones than on computers, but it is struggling to cash in on this advantage.
  • What is rarely discussed because it is happening far from Silicon Valley: the incredible rise of “Whatsapp-on-steroids” Asian messaging apps: KakaoTalk in Korea, Line in Japan and WeChat in China. All three (especially the last two) are winning over outside markets at breakneck speeds (available numbers need to be closely examined, however)

To sum up, messaging applications are throwing up multiple roadblocks for social network websites. Why?

  • Because smartphones are overtaking computers, and yet, in the words of Yujin Sohn, one of the KakaoTalk managers I spoke with a year and a half ago, “Facebook is first and foremost a social platform with elements that enable communication, whereas we are first and foremost a communication platform with social networking elements.”
  • She was talking about her own company – designed entirely for smartphones – but also about its cousins: Line and WeChat.

Whatsapp is also a tool for “conversations” (both intimate and group ones) that are built using your contact list. But the Asian trio has a head start.

  • Whatsapp’s business model depends entirely on subscriptions (1 dollar per year, free the first year). Its strong suit is simplicity.
  • The strength of KakaoTalk, Line and WeChat, however, is its “platform” development, which opens up considerable commercial possibilities. For instance, it enables them to make money through an ever-increasing number of games. Electronic commerce is just around the corner. WeChat is going into money transferring. This is a whole new business model.
  • Line applications made the most money in 2013 (if you set games aside). In Japan (the country where apps are most profitable) Line was in 7 of the 10 top spots for the games category. WeChat users yield 7 dollars per year – versus 1 dollar for Whatsapp.

Mark Zuckerberg knows all too well that he needs to get into the messaging app business and that it is too late to create his own. It’s expensive, but it’s the right move. And if you thought 19 billion dollars for Whatsapp was a lot, you should know that last November a potential Line IPO was valued at…28 billion dollars.

Crédit photo : Alvaro Ibanez

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