Commentary: Elon Musk’s everything app ‘X’ is a bad idea
Do we really want a capricious business titan to have all of our personal information and buying habits at his fingertips? Bloomberg Opinion’s Parmy Olson hopes that the Tesla boss’ idea is just another that fizzles out.
Musk is not simply buying Twitter to make it better. He claims a much grander plan: Creating an “everything app” that does whatever you need.
The idea is not preposterous. Several so-called “super apps” have long existed in Asia. More than a billion Chinese citizens use QR codes through Tencent Holdings’ WeChat to do all manner of tasks, from buying groceries to booking a dentist appointment, sharing photos with friends or playing video games. They can access a government-issued ID card through WeChat too.
“You basically live on WeChat in China,” Musk told Twitter’s staff in June. “If we can recreate that with Twitter, we’ll be a great success.”
You can see why Musk is eager to copy the model. If he truly wants to quintuple Twitter’s revenues to US$26.4 billion, one way would be to make it part of a platform that hosts lots of payment activity he can skim from.
WeChat made an estimated US$17.5 billion in revenue in 2021, largely through advertising and by taking a cut on transactions it processes for things like games, deliveries and a thriving market for digital services. More than half a billion people use thousands of mini-apps inside of WeChat every day.
Singapore-based Grab, which counts SoftBank Group and Uber Technologies as its two biggest shareholders, has also been called a super app, offering ride-hailing, food delivery and digital payments.
BOOM TIME HAS PASSED
But making a super app is hard. For one thing, Americans make mobile payments far less than their Chinese counterparts. And WeChat’s success as a daily hub came down to launching at the right time, in 2011, when smartphone sales in China were exploding, and then riding the wave of its expanding network effect.
Manufacturing a new user base as large as WhatsApp, Facebook or WeChat is all but impossible now. It would be like trying to replicate the explosion of New York’s growth into a megacity during the 19th century. The boom time has passed; the networks are entrenched.
Silicon Valley has also toyed for years with trying to build its own super apps on the notion that a strong payments platform could power sprawling services in the same way WeChat Pay does. But Facebook’s efforts to build payment services, including with a crypto platform called Libra, fell apart.
And while WeChat’s dominance comes in part from working in lockstep with the Chinese government, US Big Tech firms have an altogether different relationship with regulators and the state: They’re facing calls to be broken up.
SLIMMING DOWN, A WISE FINANCIAL STRATEGY
Slimming down looks like a wise financial strategy anyway. Facebook has shut down an array of business segments, while Instagram has been rolling back features after criticisms it was becoming too bloated.
If Musk were truly determined, he could try and buy PayPal Holdings, closing a meaningful loop for himself after co-founding PayPal’s predecessor more than two decades ago. It was named x.com. Twitter historically adds incremental features to its platform, so a comprehensive payments service would probably need to be bought and bolted on.
But Twitter co-founder Jack Dorsey could have already done that back when he was leading both Twitter and the payments giant Square, now called Block. Why didn’t he merge the two and create a super app when he could?Most likely, because he recognised it wouldn’t work: US consumers weren’t ready for a Swiss Army knife of apps, and it’d raise hackles with regulators too.
TOO MUCH DATA IN VOLATILE HANDS
In any case, it’s probably not the best idea for someone as volatile as Musk to oversee an app on which millions engage in social commentary, payments, shopping, identification and more.
It would give the world’s richest man, infamous for his unreliability, a new level of unprecedented power that he - and we - could probably do without.
Musk has a giant fan base thanks to Tesla and is a masterful self-promoter. But he also has a habit of making grand promises and not following through.
There’s a decent chance this is just another idea that fizzles out eventually too. Let’s hope so.