Chinese e-commerce colossus Tencent is an elephant in the room that is impossible not to talk about as the company surpasses Facebook in value after a blockbuster year that saw its share price more than double. Tencent makes headlines on many accounts, including foreign high-caliber investments – earlier this year, it picked up a 12% stake in Snap (the owner of Snapchat) and 5% in electric vehicle giant Tesla, aside from series of investments in startups across Asia. Investments, however, are not what I'd like to drill into this time.
Tencent's WeChat and its scale
Tencent is probably best known for its mobile messenger WeChat (less for Tencent QQ, which was released in 1999 – 12 years earlier than WeChat), and rightfully so. Brad Stone and Lulu Chen, Bloomberg, share that more than two-thirds of Chinese people use Tencent's two messaging apps, WeChat and QQ, for everything from texting to shopping, flirting, dating, watching videos, playing games, and ordering food and taxis.
Furthermore, Mary Meeker's 2017 Internet Trends report reveals that ~900 million hours a day out of a total of ~3.1 billion hours of mobile app usage took place in WeChat. Collectively, Chinese users spend 1.7 billion hours a day on Tencent apps, which is more than they spend on all other apps combined.
Released in 2011, WeChat now has close to 938 million active users, more than a third of whom spend in excess of four hours a day on the service, with half of the users spending >90 minutes a day on the app. To put that in context, Stone and Chen share that the average person around the world spends a little more than an hour a day on Facebook, Instagram, Snapchat, and Twitter combined.
How WeChat uses AI
Not only are Tencent and its offsprings massive communications and commerce vehicles in China, but also, the company is making strides to leave Western competitors in the dust with its AI integrations.
Source: WeChat AI
- Voice recognition is one of the biggest areas of everyday AI in action in WeChat. The company behind the technology is called Chumen Wenwen (Mobvoi in En). The concept works in a similar way to Apple's Siri but with a built-in app that responds with more words and particularity in answers. The service links directly with third-party apps, enabling users to use voice to perform necessary actions in those apps.
- WeChat's virtual girlfriend app Xiaobing, which was developed by Microsoft and has an icon to type with, can have a conversation with the user. Users can even play 'guess who I am' game with her.
- Translation capability – Translating Chinese is an extremely tricky task because Chinese data is all double-byte. WeChat allows to open up the translation account and paste or type in what needs to be translated, whether English or Chinese. Seconds later, the AI provides the answer, including alternative translations in case users don't agree with the AI's recommendation.
- The Voice Donor – an initiative to have thousands of books voice-recorded for the blind. QR codes were put in the blank pages of books and the reader was invited to read a passage. The AI then intelligently edited all the passages together and 200,000 people's voices were put to use.
While all of it is impressive, one feature that I thought is just wonderfully brilliant is that apparently WeChat's 'shake your phone feature' is used to connect strangers who are shaking their phones at the same time. I don't know if anyone offers an easier way to connect digitally without having to memorize names to look them up later or having to type in names in different apps to find a person (that's if you can type names right in the first attempt).
WeChat is perfectly positioned to get the AI game right (especially with its recent push into research via AI Lab). Being a chat app, WeChat is able to collect countless messages each day that real people send to one another.
“Conversational data is richer [than search or shopping data] because you have that many people on the platform performing that many interactions,” shares Tak Lo, Partner at Hong Kong-based AI startup accelerator Zeroth.ai. “Shopping and search engine data show one type of data, which is purchasing or shopping intent, which is valuable, but different. For example, if you were to build out a Natural Language Understanding engine, you would not use search engine data, because no one searches based on complete conversational phrases.”
QZ notes that WeChat has an extra advantage: a significant portion of its users communicate using voice. Push-to-talk, a neglected feature in most countries, has become a preferred method of chat for many users on WeChat. That means Tencent can draw not just from text but from recorded speech too by turning devices into walkie-talkies.
WeChat as a business-driving vehicle
While single-purpose apps in the US are struggling to gain traction partially because of exactly that – being single-purpose – Tencent made its apps a lifestyle choice by jamming multitude of use cases into a single platform. WeChat already serves as a one-stop-shop for everything from reading news and booking taxis to ordering takeaways and making payments. In fact, among the top reasons users are joining a WeChat group of 100+ users is everything an average Western user does across separate proprietary solutions:
- Corporate internal communications
- Professional networking
- Leisure and life (e.g. school colleagues)
- Information sharing (e.g. online courses)
- Entertainment-oriented (e.g. fan groups)
Speaking of groups – WeChat groups are very powerful marketing vehicles for e-retailers, whom the company doesn't even charge commissions or transaction fees. Especially popular and useful groups can bring money to their creators through membership fees (much like Instagram stars would collect ad money, but WeChat group owners can charge for membership in their groups).
WeChat has a whole suite of instruments and instructions for official account platform developers, which even includes WeChat Invoice, an e-invoicing capability. WeChat has released an electronic receipt General Solution Program to promote the usage and convenience of electronic receipts with the focus on users at the center, the company shares. WeChat has designed an ‘authorize first, swipe later’ billing and payments process in view of the different amounts of time that different vendors will need to issue a receipt. It decouples the two processes of the user's submission of a request and their receiving of the receipt. The receipt is guaranteed to make it to the user's account in a stable and reliable manner when the user is fully aware of what is going on.
WeChat Pay is one of the cornerstones of WeChat's extensive capabilities. Used in China by 600 million people, the service takes advantage of Chinese banks’ low processing fees, allowing users to send very small monetary gifts called “Red Packets” to each other – a feature WeChat introduced in 2014 to exchange money electronically, based on the age-old Chinese custom of giving red envelopes filled with money at weddings, holidays, and special occasions, journalist Eveline Chao shares. WeChat allows its users to send Packets of predetermined amounts to each other, either individually or in groups.
Chao describes the obsession with this digitally revived tradition the following way: "Say you have a chat group with five pals. You can put $5 in a red envelope and set it to disburse equally, so each friend gets $1. Alternatively, you could stipulate that the first two people to tap will get all the money in equal portions – $2.50 each – or that the first two people get a random cut, maybe $1 for one person and $4 for the other. The result is that any time a red envelope appears, people scramble to tap on it as fast as possible. (The packets expire in a day, adding to the time pressure.) Only afterward do they see how much money they’ve won, giving it an addictive element of surprise. So addictive, in fact, that third-party apps now exist that let users grab red envelopes without unlocking their phones."
The journalist also shares that in the last Chinese New Year, >420 million WeChat users sent a total of 32 billion red envelopes (10X increase from 2015). More impressively, 409,000 of them were sent in a single second, just after midnight on the first night of the holiday.
Other, more generic, situations of WeChat Pay use include:
- Supermarket and convenience stores – 28.9%
- Online shopping – 26%
- Restaurants and food – 21.6%
- Malls – 20%
- Utility fees – 14.2%
- Transportation and travel – 13.2%
- Entertainment and leisure – 8%
- Public departments – 4.3%
- Beauty and fitness salons – 4.2%
- Hospitals – 2.8%
The functionality of the super app is nothing short of impressive.
Source: MAI Capital
WeChat mini-programs and developer tools
WeChat also operates its own developer platform with 200,000 third-party developers that are making everything imaginable and unimaginable to keep users glued to the platform. WeChat even offers WeUI – is a set of basic style library consistent with WeChat native visual experience, officially designed by the WeChat Design Team, tailor-made for WeChat Web development and WeChat mini-programs, in order to improve and standardize the experience for WeChat users.
WeChat rivals Google and Apple developer platforms with its WeChat JS-SDK – WeChat public platform with WeChat in-app based web development toolkits for web developers. Through using WeChat JS-SDK, web developers can effectively use the capabilities of mobile phone systems to take pictures, select pictures, voices, and locations. Also to use WeChat's unique capabilities such as WeChat sharing, scanning, card, payment to provide WeChat users better quality Web experience.
Would be pointless to list dozens of extensive capabilities WeChat enables, they can be found with clear instructions in WeChat Official Account Platform Documentation.
Why the Swiss Army knife?
In tier one Chinese cities (the most developed cities like Beijing, Shanghai etc.), WeChat’s penetration rate is around 93%.
"To get an understanding of the current capabilities of WeChat, and why it is so popular in China, imagine WhatsApp combined with Facebook, Instagram, Twitter, Skype, Tinder, eBay, PayPal, Uber, Google Maps, Slack, Apple Pay and many more apps used by western consumers. WeChat allows users to do everything from communicating with friends, staying up to date with the news or celebrities, booking doctors’ appointments, hailing a ride or paying bills. All of this is done without ever having to leave the app. <...> For companies that are looking to the Chinese market, no matter who your customer is, they’re on WeChat. All of your Chinese competitors... They’re on WeChat too. Not being on WeChat places you a step behind in the increasingly competitive Chinese market." – MAI Capital, an Australian Investment Group focused on investing in companies looking to expand into China.
How China Is Changing Your Internet – NY Times