Facebook needs to either reinvent itself or go back to its roots and I'm afraid that buying success stories with billions isn't going to help in that.
Facebook is currently rather incapable of delivering what I originally signed up for when I joined: keeping posted about how my friends are doing, and thus having the incentive to post something about my life as well because my friends could see how I'm doing. I can't in practice control what I see and how much I see from each friend. Things happen and I don't know about them until I happen to read through my friend's timeline manually. I don't know who actually sees my posts. That makes it rather useless.
The core of what Facebook used to be would be really simple to implement and most people wouldn't genuinely need much more.
I uninstalled WhatsApp 3 days back (deleted 3 somewhat largish groups of 15, 43 and ~34 - they all agreed to move to Viber). At least 10-15 of my friends have already done the same (uninstalling part). Almost everyone is one Viber anyway and some are now on Telegram too.
Now, I don't know how much such migrations will affect user-base (and I don't guess too much) but it can be noted that this is also the user-base that does online shopping, rates products and does a lot of things online, so this is certainly going to put a dent.
Why do so many people think payments is the key to monetization? Is it really as dumb as "it involves money"?
Payment processing is a total commodity business that is super-resistant to increasing its tiny margins, which is what would need to happen to monetize it to the tune of a 10 digit valuation.
In comparison layering advertising or premium features on top of messaging is a much more feasible way to generate revenue, since that is pure margin. It's not a superficially sexy / hand-wavey though.
I don't think it's about payments per se, it's about owning the moment when spending money is required / relevant for the user.
If you're in a chat app all damn day (like all my family is), and something comes up (OMG it is Dad's birthday), I'd rather just get the shopping, reservations, etc done right then and there at the point of relevancy.
WeChat's success isn't about having the credit card, it's about making that moment of action extremely fluid.
Most people just want a messenger though. They're not really interested in their messaging client selling them stuff. Feels like the article makes a pretty bold leap in assuming because a messaging company is experimenting with a store front, the company is actually succeeding in converting messaging users to purchasing users. I'm fairly sure that conversion number is extremely low, especially in China.
The truth is Tencent invested in a big cab hailing service Didi Dache, and promoted its payment service by paying both drivers and customers. Tencent wants to eat shares from Alipay.
Nothing wrong with that -- it's just paying an acquisition cost. PayPal paid out millions: $10 for new registrations, and $10 to the referring user back in 1999 (?). By incentivizing customers to add payment info, it takes the friction out of future opportunities.
Wechat has the concept of "public" accounts, with an API for managing conversations and interactions with customers. THAT is the secret sauce. See grata.com for an example of what is possible with a chat API. Facebook will surely add an API to WhatsApp.
I'd be interesting in figuring out if people just want a messenger because they don't know what's possible with something more, simply because they've never seen a well-implemented version of something more, or if it's because they truly do simply want only a messenger.
An example like WeChat is funny and interesting because payment functionality is something you'd think should be either a dedicated app (like what PayPal, Square, and others are trying to do), or a core function integrated into the OS itself (like what Apple is trying to do, especially with their new fingerprint thing making their phone more secure).
WeChat being able to get into the payment space is interesting precisely because (a) they are not a dedicated payment company, they've only just figured out how to monetize their user base in a unique and innovative way, (b) they're not a phone manufacturer, and (c) they're not a mobile OS company.
I would not have predicted this at all a few years back. So I think a few years back, I would have agreed with you simply because I would have not thought of it, not because I actually didn't care for it.
edit: coin Henry Ford quote here about faster horses
I thnk that's a fair point but I do think the WeChat examples are compelling. If you think of chat app potential in terms of whales and fishes there could be some big power spenders. Selling 150,000 phones in 10 mins is compelling enough to me to,suggest there's potential there.
I think a lot of it is cultural. If you look at any portal or popular site in Asia, it's crammed with information and call-outs.
OTOH, US sites and apps have been moving in the opposite direction. Facebook itself acknowledged this by moving to an "unbundled" app development strategy.
As people have mentioned already, Whatsapp is successful because it is simple and functional. Just because the revenue model of Whatsapp is simple doesn't mean it is less effective. Moreover, I believe 'platforms' are overrated. Facebook is a platform. But it is trying really hard to stay relevant today ($19 billion!).
Facebook is currently rather incapable of delivering what I originally signed up for when I joined: keeping posted about how my friends are doing, and thus having the incentive to post something about my life as well because my friends could see how I'm doing. I can't in practice control what I see and how much I see from each friend. Things happen and I don't know about them until I happen to read through my friend's timeline manually. I don't know who actually sees my posts. That makes it rather useless.
The core of what Facebook used to be would be really simple to implement and most people wouldn't genuinely need much more.