In 2011 the “WeChat” smart phone application took hold in mainland China. First released in January, 2011 the app had between 4 and 5 million users by May 2011. By the end of 2011 it had 50 million users and as of January 2013, it had 300 million users, 70 million of whom were outside mainland China. The app was launched by Chinese company, Tencent Holdings Limited, which is the fifth largest internet company in the world (ranked by annual revenue) after Alibaba, Amazon, Google, and Ebay. Tencent Inc, was founded in 1998 and incorporated in the Cayman Islands with initial funding from venture capitalists. It is a holding company who’s subsidiaries provide mass media, entertainment, internet and mobile phone services.
The WeChat subsidiary is a social application with voice and text messaging, timeline (imitating Facebook) and several other social features. WeChat is offered as a free download and is very popular in China and among Chinese ex-patriots. It is expanding into other Asian countries and also adding more features like gaming. It is advertised as “free texting, voice messages, and video calls in your pocket.” The service provides group chats, animated smiles, photo and video sharing and a walkie talkie mode that can be used with up to 40 people. Basically WeChat is a free networking platform that allows Tencent Holdings to cultivate potential clients for their other for-pay services. The strategy seems to be working, as in 2013 WeChat was the fifth most used smartphone app worldwide.
There is another side to WeChat. The app walks a difficult line between offering its users complete texting and communication freedom and conforming to China’s political censorship. In June 2014, WeChat closed 20 million accounts, supposedly because those accounts offered prostitution services. China’s a big place, but 20 million prostitutes on a chat service? Let’s get real. All kinds of political censorship was wrapped up and hidden behind a big fat lie. The lie was that anyone the government wanted to stop from communicating freely they called a prostitute and closed the account. Sure there were also some actual prostitute accounts closed, but prostitutes aren’t a political threat to China’s communist party.
WeChat started having problems with Chinese government censorship in early 2013, when there were reports that Chinese language searches outside China were being keyword filtered and then blocked. This was all happening outside of China. WeChat already censors its communications inside China in order not to draw unwanted attention from the government. But international filtering and blocking is a whole new order of censorship. The apps fast rise to popularity and use, mostly by Chinese, in countries around the world, is a cause for concern. WeChat contains the ability to access text messages and contact address books of its users and the users’ location through GPS feature. Countries such as the United States, India and Taiwan all fear WeChat poses a national security threat.
According to Reuters news service, the June 2014 Chinese government crackdown on WeChat. “the app is being used as a non-censored news source among savvy mobile users in China.” An unnamed Chinese official said, “Some people are using the platform to disseminate negative or illegal harmful information to the public, seriously damaging the internet system and hurting public interest, causing dissatisfaction among internet users.” The crackdown focused specifically on accounts that sent widely distributed messages that could potentially mobilize society. The government targeted accounts spreading rumors and ideas on violence, terrorism, cheating and sex. I guess this is how the 20 million prostitutes came into the story; anything that mentioned cheating or sex indicated a prostitute. In fact anything that mentioned violence or terrorism were probably also called prostitutes.
Mobile Payment Service
Does WeChat have a genuine interest in providing free open communication channels for texting, and vocal messages? Probably not. Tencent Holding and the WeChat app have been willing to submit to censorship within China all along. That’s a business decision. In order to stay open and grow as a platform WeChat has to stay in the Chinese government’s good graces or have restrictions imposed upon them. Considering the fact that making money on other services is obviously the real goal of the WeChat app, why would Tencent Holding allow anything to slow the WeChat apps growth. So censorship, deal with it as a business cost that must be dealt with in order to grow.
Tencent has made great profits with mobile payment platforms that are more than just functional, the Tencent software to give red envelopes in celebration of Chinese New Year is both social and gamified. Traditionally, the Chinese give away money in red envelopes at Chinese New Year. But over Tencent’s WeChat messaging platform people in China didn’t just exchange a red envelope they also had the digital ability to make it a competitive game. The app allowed a red envelope giver to distribute money, in small amounts (less than $32) among a group of people. The money amount could even be randomly established so the distributed amounts are all different. It became a game of sorts.
Tencent has other mobile and texting based payment systems. For example, the Tenpay open platform is focused on helping banks offer a universally workable payment platform to their customers. The banks weren’t doing well with this technology all by themselves. But once Tenpay entered the niche the banks could stop wasting their resources developing their own apps and instead encourage their customers to use Tenpay for mobile money transfer and to use WeChat messages to communicate about the transfers. WeChat and Tencent Holdings Limited are gaining control of several Chinese digital niches.