Author: Rita Liao

TikTok is giving China a video chat alternative to WeChat

ByteDance, the world’s most-valued startup, just launched a new social media product under its Douyin brand in what many people see as a serious attempt to challenge WeChat.

Tencent has long dominated China’s social networking space with WeChat and QQ. WeChat claims to have one billion monthly active users worldwide, most of whom are in China. Its older sibling QQ managed to survive the country’s transition from PC to mobile and still have a good chunk of 800 million MAUs at last count.

The news has got many people excited. Some of the top trending words on Weibo, China’s closest answer to Twitter, today are linked to ByteDance’s move, such as “social”, “waging a war” and “Zhang Yiming,” who founded ByteDance in 2012.

Over the years Tencent has drawn contenders from all fronts. Ecommerce behemoth Alibaba was one, whose app “Laiwang” to take on WeChat later pivoted to a Slack-like product for enterprise communication.

Now ByteDance is in the spotlight with its new brainchild, Duoshan. The app comes as a mix of TikTok, which is called Douyin in China, and Snap, to bet on a 5G-powered future in which new generations prefer using ephemeral videos to communicate.

Unlike TikTok, which incentivizes users to follow celebrities and strangers, Duoshan is built for private messaging. It offers a dazzling selection of special effects and filters as most other short-video apps do these days. The twist is that videos disappear after 72 hours to provide stress-free, off-the-cuff sharing, a need that WeChat also noticed and prompted the giant to come up with its own Snap-like Stories feature recently.

Screenshots of Duoshan. Image: ByteDance

“We are seeing more and more Douyin users share their videos through other social media platforms and channels,” Douyin’s president Zhang Nan said in a statement. “With the launch of Duoshan, we are creating our first video-based social messaging app to allow users to share their creativity and interact directly with their family and friends.”

You may not know ByteDance, but its suite of media apps are turning heads all over the world thanks to millions of dollars spent on advertising. TikTok, which swallowed up Musical.ly last year, claims to have more than 250 million daily active users with MAUs reaching 500 million. That solid user base will surely help Duoshan during its initial user acquisition as the app allows easy login for existing Douyin users.

While TikTok is not a direct threat to WeChat — for it’s built for media consumption and WeChat is more of a tool for communication and a platform to run daily errands — Tencent did respond with a dozen of video apps over the past year to play catch-up. Now, Duoshan appears to be going after WeChat’s core — instant messaging.

“We hope WeChat doesn’t see [Duoshan] as a competitor. What they do in essence is to build an ‘infrastructure’. We, on the other hand, is only going after people who are closest to you,” Chen Lin, the newly appointed chief operating officer of ByteDance’s news app Jinri Toutiao said at a press event today.

Two other high-profile entrepreneurs are joining ByteDance to roll out their own social apps today. Smartisan, who backed a WeChat rival that turned out to be a blip, is announcing the product tonight in China. The other challenger is Wang Xin, a pioneer in China’s online video-streaming space who was sentenced to jail in 2016 after being charged with providing easy access to pornography. His take on social media — Matong — is already live and is greeted with such warm reception that its server went down.

The next phase of WeChat

Thousands of people gathered Wednesday night in a southern Chinese city for Zhang Xiaolong, Tencent’s low-key executive who built WeChat eight years ago. It’s no longer adequate to call the app a messenger, for it now enables myriads of functions that infiltrate Chinese people’s private and public lives.

It wasn’t just the tech circles tuning into the event. Civil servants, real-estate agents, salon owners, fruit vendors, teachers, artists — anyone who use WeChat to facilitate daily work — watched attentively for news and tips that came out of the annual conference.

Zhang, nickname Allen, is by nature a hardcore product manager. He went to great lengths during his 4-hour speech telling people productivity is WeChat’s holy grail, and that he wants to make user sessions “short and efficient.” He called out apps obsessed with keeping users on, which many may agree include ByteDance’s video app TikTok and news aggregator Jinri Toutiao.

That’s a tough sell, though, for WeChat is anything but a disposable tool. The app now boasts over 1 billion daily users. 750 million of them open WeChat Moments, a scrolling feed of friends’ updates, each day during which they check it more than 10 times. User growth is cooling, but that’s expected given the super app’s enormous base. In addition to being a social network, the juggernaut has also devised a host of new features that may generate more eyeball time — and help it maintain meaningful growth.

An app universe

Two years ago, WeChat made a move that would speed up its evolution from a simple app into an all-in-one platform. It rolled out so-called mini programs, which are stripped-down versions of native apps with only core features in exchange for smaller size and quicker access. To date, there are over 1 million such lite-apps and 200 million people access them every day, an achievement that inspired other tech giants to follow suit.

Zhang said from the outset that mini apps weren’t meant to replace regular apps, for the latter provide a more complete user journey. In effect, mini apps are getting more powerful as they further integrate with chats and gain new capabilities, such as an upcoming Siri-like voice assistant. Mini programs are also making inroads into the offline world, facilitating transactions like scan-to-pay at subway turnstiles, all without the fuss of app downloads.

There’s no mini-program “store” at the moment, but a less conspicuous infrastructure is taking shape. Users can already look mini apps up on WeChat’s internal search engine and may soon be able to rate them, according to Zhang. WeChat will in turn factor those reviews into search results, akin to how the App Store works.

The public space

Whether mini programs threaten the existing app ecosystem is disputed, but one thing is certain: They have a strong appeal to those without the capacity or need to build full-size apps, like a teacher who wants a tool to broadcast announcements to parents. There may be only a few dozen users, so a lightweight, easy-to-build app makes more economic sense.

WeChat’s annual company conference in Guangzhou, China. Photo: Tencent

Governments have also warmly embraced WeChat as part of a national effort to streamline public services. Anyone who’s lived in China would dread its red tape. Mini programs are digitizing many tasks that traditionally required numerous visits to government offices, such as renewing one’s social security card.

While public services may not be a big revenue driver, they do boost users’ dependence on WeChat. Alibaba’s digital wallet Alipay also offers a plethora of public services, though many are limited to payments. “After all, WeChat has more use cases, from social networking to payments, so local governments find it closer to people’s lives,” a third-party mini program developer for government services told TechCrunch, asking not to be named because the person wasn’t allowed to discuss the matter publicly.

New growth fuel

The world is watching when China’s most used app will hit its wall on user growth. WeChat hasn’t seen much momentum overseas except among Chinese expats and outbound tourists. Back home, senior users are fueling its growth. 65 million of WeChat’s monthly users are now over the age of 55, the app’s fastest growing cohort. Many of them turn out to love mini games, which are part of the mini-program universe. These games, which tend to be casual and easier to play than PC or mobile app games. have surpassed 400 million monthly users. For some context, China reached an estimated 700-million mobile game population in 2018, according to market research firm iResearch.

Curiously, WeChat hasn’t pushed monetization aggressively despite commanding a gigantic user base. Zhang has reiterated that monetization isn’t his priority, but changes are underway. WeChat is planning to add more advertising inventories to mini apps in 2019, executive of WeChat open platforms Du Jiahui said during the event. Tencent earnings show that lite-apps and Moments are already driving advertising revenues for the company over the last few months. Tencent is also under pressure to find alternative monetizing channels as its core revenue driver — video games — took a hit amid an industry shakeup last year, prompting the firm to place more focus on enterprise-facing businesses.

LinkedIn now requires phone number verification for all users in China

LinkedIn’s China site looks and functions just like LinkedIn everywhere else, except now it asks users in the country to verify their identities through phone numbers.

The American company is requiring both new and existing users with a Chinese IP address to link mobile phone numbers to their accounts, TechCrunch noticed this week. LinkedIn had for months told its China-based users to provide mobile number details before sending them to the main page, but it had mercifully kept a little “Skip” button that let users avoid the fuss until at least last week.

“The real-name verification process for our LinkedIn China members is a legal requirement, which will also help improve the authenticity and credibility of online accounts,” a LinkedIn China spokesperson wrote back to TechCrunch in an email without addressing whether the process is new.

The spokesperson also links the policy to China’s burgeoning mobile industry: “Considering the growing popularity of mobile devices and mobile Internet, Chinese Internet users are adapted to registration with mobile phone numbers instead of email addresses. Almost all apps in the Chinese market are applying this trend to follow users’ habits.”

LinkedIn users with a Chinese IP address are greeted with an identity check tied to phone numbers. Screenshot: TechCrunch

In a note visible to China-based users only, LinkedIn explains that its identity check is a response to local regulations:

In some countries, local laws require that we confirm your identity before letting you engage with our Services. You must provide a mobile number and confirm receipt of our text. This phone number will be associated with your account and is accessible from your settings. If you choose to change or delete your confirmed mobile number your ability to access our Services in certain countries (e.g. China) will be blocked until you once again confirm your identity.

The California-based social network for professionals is a rare existence in China, where most mainstream global tech services like Facebook and Google have long remained blocked. Exceptions happen when foreign players bend to local rules. Microsoft’s Bing is accessible in China by censoring search results. Google also reportedly mulled a censored search service to re-enter China, an attempt that outraged its staff, politicians and speech advocates.

LinkedIn, which launched in China back in 2014, also hires so-called “information auditors” to keep close tabs on what users say and share in its China realm, according to a job post the firm listed on a local recruiting site. Like Google, LinkedIn caught flack for censoring content.

Real identity

Digital anonymity came to an end in China — at least in theory — when the sweeping Cyberspace Law took effect in 2017. The rules, which are meant to police information on the web, ordered websites to verify users’ real identities before letting them comment or use other tools, though users can still post with their screen names.

Large platforms like messenger WeChat and Twitter -like Weibo reacted swiftly by running real-name checks on users. The staple practice is to collect mobile phone numbers, which became a form of ID after China introduced a policy in 2010 requiring all buyers, foreign or Chinese, to show a piece of identification when they obtain their 11-digit identifiers. Google’s rumored search engine for China also asked for users’ phone numbers, according to The Intercept, which would make it easier for the government to monitor people’s queries.

LinkedIn’s China office in Beijing. Photo: LinkedIn China via Weibo

LinkedIn had been able to avoid the inevitable process for months. Perhaps the government had gone after the biggies first. After all, LinkedIn is only a fraction the size of its main rival in China. As of November, LinkedIn had 13 million monthly installs while its local peer Maimai had 95 monthly installs, data from iResearch shows. Both are dwarfed by WeChat’s more than 1 billion monthly active users.

As with other fledgling industries, laws often lag behind technological development, not to mention the enforcement thereof when the odds are against enterprises. Take ride-hailing for example. Unlicensed drivers and vehicles were still running on the roads two years after China legalized the sector. When the government steps up oversight recently, the market is hit by a shortage of drivers.

Clamping down

TechCrunch has come to understand that LinkedIn’s identity enforcement is linked to the latest wave of government crackdowns. “Slowly, the Chinese Communist Party has been pushing their collective thumbs down on, not only foreign internet companies but all internet companies. It just so happens that the recent political atmosphere is causing more scrutiny,” a source with insights into the matter told TechCrunch, asking not to be named.

Other websites are also indeed tightening controls over users. Many apps that previously allowed third-party logins from platforms like WeChat and Weibo also recently started collecting users’ phone numbers, several people who experienced the changes told TechCrunch.

Users can still get around LinkedIn’s real-name verification by switching on their virtual private network, known as VPN, that lets people surf the net from an overseas IP address and circumvent the Great Firewall, China’s internet censoring machinery. But the practice is becoming more challenging and the stakes are growing. By law, only government-approved providers can set up VPNs. In response to regulatory oversight, Apple pulled hundreds of VPN apps from its China App Store in 2017.

More recently, China’s telecoms regulator slapped a 1,000 yuan (around $146) fine on a man for accessing the “international net” through “illegal channels.” The case is one of the few known instances where individuals are punished for using VPNs, sending worrying signs to those jumping the Wall to surf the unfiltered world wide web.

China’s WeChat is the latest to get Snap-like ‘Stories’

WeChat, the Chinese messaging giant with over 1 billion monthly active users around the world, just added a Snap-like ephemeral video feature as part of its biggest overhaul since 2014.

The revamp comes as Tencent, which owns stakes in Snap, sees increasing rivalry from up-and-comers like video app TikTok and news app Jinri Toutiao. WeChat has over the years morphed beyond a straight-up messenger to include many utility purposes. With more than 1 million lightweight apps up and running, users can accomplish a long list of tasks ranging from shopping to ride-hailing without ever having to leave WeChat.

Meanwhile, some have expressed frustration over WeChat’s core as a social app. Moments, a feature akin to Facebook News Feed, was once a haven for close friends to share articles, photos and videos. But newsfeed content became blander over time as people’s contact list grows to include their bosses and their local fruit seller who needs to be added as a friend to process WeChat payments.

WeChat founder Allen Zhang is known for his obsession with user experience and has been cautious with tweaks, so a major redesign to the super app is effectively a guidebook for where WeChat is headed for the next few years.

The new off-the-cuff video feature, aptly named “Time Capsule,” is one of WeChat’s more noticeable updates. In the past, users shared videos to three main destinations: A friend, a group chat or Moments. This route remains unchanged but with Time Capsule, users can also upload videos of up to 15 seconds that disappear after 24 hours, similar to how Snap Stories and its slew of clones including Instagram Stories work. Meanwhile, Snap has also drawn inspiration from Chinese apps in a recent redesign.

A blue ring will appear near the profile of those who have recorded an instant story. Screenshot by TechCrunch

Different from Instagram, which recently started allowing users to share Stories to close friends, WeChat doesn’t let users share Time Capsule videos to friends, yet. Instead of lining up all the instant videos at the top of the app as Instagram does, WeChat is asking users to find them in less conspicuous ways: On Moments, in a group chat or in one’s starred friend list, a blue ring will appear near the profile of those who have recorded instant stories.

These secret entry points mean users are prompted to watch videos of those they know well as they rarely click on the profile of, say, a fruit vendor.

Time Capsule is also a step up from WeChat’s old video sharing tool with additional features such as locations and music, functions that are ubiquitous in TikTok and other short-form video apps. Users can also react to Time Capsule videos by blowing virtual “bubbles”, whereas the old video format doesn’t allow such interaction.

Time Capsule is a step up from WeChat’s old video sharing tool with additional features such as locations and music. Screenshot by TechCrunch

While Time Capsule is not necessarily a direct challenger to TikTok — a product of the world’s most valuable startup ByteDance — it enriches the video experience for users who want to give close friends a window into their life. TikTok, by comparison, delivers content by relying on artificial intelligence to read users’ past habits rather than studying their social graphs.

That said, WeChat has shown signs to catch up with TikTok by rolling out a dozen of video apps this year. While Tencent blocks TikTok videos from being shared to WeChat, its own proprietary video app Weishi gets preferential treatment. When users choose to record a video on WeChat, there’s an option to record it via Weishi. But Tencent’s short video fleet has a long way to go before they reach TikTok’s global dominance of 500 million monthly active users.

Another WeChat update also appears as a response to a popular ByteDance app. While WeChat users could show appreciation for an article by clicking on a ‘like’ button, there was no effective way in the past to know what their friends enjoyed. The revamped WeChat now lets people see all the articles their friends have liked under one single stream called “Wow”.

That’s a feature that ByteDance’s Jinri Toutiao news app cannot rival as Wow is built on billions of users who know each other, unlike Jinri Toutiao that relies on AI personalization like its sibling TikTok. WeChat is already colossal and can never please every user, but its new move shows that it’s paying close attention to whoever that may steal its users’ eyeball time away.

The forgotten ‘Facebook of China’ is sold for $20M

Renren, which was once heralded as the ‘Facebook of China’ and later became China’s answer to MySpace after falling out of fashion among its core young users, is selling its social networking business.

Renren’s parent company Beijing Qianxiang Wangjing has agreed to sell all tangible and intangible assets of renren.com to Beijing Infinities Interactive Media, according to a statement. As part of the deal, Qianxiang will receive $40 million worth of shares in Beijing Infinities, a $700 million firm that owns one of China’s major IT news sites DoNews.

“I am happy to find a home for renren.com,” says Renren’s chairman and chief executive officer Joseph Chen in the statement.

The social network won’t be foreign to its new home. On the list of the buyer’s shareholders is Oak Pacific Holdings, which Chen and James Liu, Renren’s executive director and chief operating officer, control.

Once a highflyer in China’s PC era, Renren’s prospects have faded as it fell behind peers like Tencent and Weibo in the mobile space. Its stocks hover around $2 today, compared with its spectacular moment at $84 when it debuted on the New York Stock Exchange in 2011. That put its market cap only behind Tencent and Baidu. Renren says it plans to remain listed in the US after disposing of its social networking arm.

Shedding its social network legacy, the company says, will allow it to focus on the more promising ventures. In recent years, Renren has diversified into areas outside the social space, including a used car platform in China, US-based transportation network Trucker Path, and a SaaS business in the US. The auto unit has been a key revenue driver, accounting for more than 90 percent of its total revenues in Q2 this year, a spike from 60 percent throughout 2017.

Renren has also been a prolific startup investor with a portfolio valued at $500 million (paywalled) after deducting debt, according to the Financial Times. The company was also mulling an ICO earlier this year but reportedly shelved the plan after talks with Chinese regulators.

A glorious past

These days, Chinese youngsters hang out on WeChat, QQ, Weibo, and increasingly Douyin – TikTok’s China version – but back in the PC days, teens and college students flocked to renren.com.

Like Facebook, Renren started from the dorm rooms at China’s top universities. Its founders aptly named it “Xiaonei”, which means “on campus”, when they started the site to target student users in 2005. Among its early founders was Wang Xing, who would go on to launch Meituan Dianping, a neighborhood services provider that has blossomed into a $300 billion giant listed on the Hong Kong Stock Exchange.

A year later, Chen bought out Xiaonei and merged it with his own Xiaonei rival. He later renamed the new entity to Renren, which means “everybody”. The social network flourished and got a further boost after China blocked its American competitor Facebook in 2009.

In its heyday, Renren had over 100 million active users. Today, it’s more like a time capsule, but its once loyal users haven’t erased it from their memories. In August, Renren staged a marketing stunt that got waves of internet users reminiscing their good old days on the site. Topics ranged from how they played browser games together and sent anonymous notifications to crushes. But the excitement was transient, and people soon resumed their routines on the mainstream social apps of 2018.

Renren has not mentioned plans to close down its forgotten social network, so users can still log in whenever they feel nostalgic, safe from the agony that their Path counterparts had to go through when the latter recently shuttered.