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Messaging apps: King Makers in the emerging world of chatbots

Views, 18 August 2016
In Ventures, Views

Messaging apps: King Makers in the emerging world of chatbots Sebastiaan Vaessen, Head of Strategy at Naspers. 

Messaging apps such as Whatsapp, Messenger and Snapchat have the potential to radically change the nature of competition in digital services.  

An increasing number of companies are investigating chatbots to sell their services and automate customer service. In doing so, the messaging platforms they integrate into become King Makers: their choices can dictate which app companies succeed and which fail.

From apps to chatbots
Virtual robots or chatbots powered by artificial intelligence (AI) are transforming the way companies do business with their customers by automating manual processes. The entire premise of a bot is to make life simple and efficient.

Arguably bots are more suitable for mobile than apps. Messaging is at the heart of our mobile lives and transactions via chatbots are faster and easier than installing, opening up, and navigating through an app.

Messaging Apps as King Makers
It’s still too early to know exactly how things will play out, but there are good reasons to think that messaging apps can change the rules of competition forever. While it is early in the hype cycle, chatbots present Facebook, Snapchat and other chat apps, with an opportunity to become one-stop-shops for services.

And Facebook is in pole position. While Facebook Messenger is certainly not the primary messaging app for the masses at the moment, it is definitely one of the most powerful platforms for businesses to reach their customers going forward because it can offer companies one billion users and their social graph to engage with.

Most analysts assume Facebook will adopt an ‘open marketplace for chatbots’ like the Apple App store. And indeed, more than 11,000 bots have been added to Messenger since the platform launched in April, and tens of thousands of developers continue to build new ones every day. However, it is not unlikely that in the future, Facebook will decide which firms you use to order a taxi, book a flight or find a local restaurant.  While great for consumers, the (un)intended consequence of automation is that it takes choice out of the market. Like Facebook is now directing news on its newsfeed, consumers will soon be funnelled to Facebook’s preferred service providers.

China is showing the way (again)
We are already seeing these King Makers emerge in high-growth markets. 

In China, Tencent’s WeChat has evolved to become far more than a messaging app; it’s a rich mobile ecosystem. It is filled with powerful features and automated services that touch nearly every part of consumers’ lives. When WeChat integrated Didi Dache into its platform it quickly doubled the number of people using the taxi app.

Being a King Maker can be inadvertent or a purposeful business choice. Tencent invests in many of the companies it integrates into WeChat, so it shares in the profits from the rapid growth it enables for its partners.

If WeChat’s experience in China is anything to go by, we may soon be witnessing the emergence of the most powerful transactional platform the world has ever seen.

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