Elon Musk, multibillionaire and owner of social media platform X (formerly Twitter), has been working on turning the site into a ‘super-app’ since at least its rebrand in July of last year.
The goal is ambitious: when the announcement was made, CEO Linda Yaccarino told followers that “X is the future state of unlimited interactivity – centred in audio, video, messaging, payments/banking,” and if successful would represent the culmination of a decades-long vision.
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X is the future state of unlimited interactivity – centered in audio, video, messaging, payments/banking – creating a global marketplace for ideas, goods, services, and opportunities. Powered by AI, X will connect us all in ways we’re just beginning to imagine.
— Linda Yaccarino (@lindayaX) July 23, 2023
In service of this aim, X has been gathering money transmitter licences from states across the US, most recently Utah. These licences allow the company to facilitate money transfers and have been acquired at quite a clip. Its first three were gained in July last year, and X now has approvals from 15 states including New Hampshire, Michigan and Missouri.
What is a super-app?
The first platform to be called a super-app was Chinese WeChat, which offers the functionality of a traditional social media site as well as payment options, allowing users to not only send money to each other but also to purchase goods advertised on the site.
This model has paid dividends for the company; its parent, Tencent, reported revenues of $7.29bn from its FinTech and Business Services offerings and a monthly active userbase (MAU) of 1.3 billion across WeChat and its PRC sister Weixin in Q3 2023.
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By GlobalDataExplaining the appeal, Senior GlobalData analyst Amelia Connor-Afflick said: “Super-apps, pioneered in China with WeChat, have been extremely popular in Asian markets. Western-based social media platforms are seeking to mirror this success. Mark Zuckerberg has been open about his plans to transform Meta into a super-app, and the company has expanded its offerings to include e-commerce, online dating and a marketplace.
“The super-app model attracts social media companies because they want to expand their pool of revenue at a time when their ad-based business model is under legal scrutiny, and they face a customer backlash over the use of personal data.”
The appetite in the West for super-apps has so far been lacking, however. The consolidated experience of Weixin in China is fragmented in the US, where X and Facebook exist alongside the likes of Uber, Deliveroo and Venmo.
Taimur Ijlal, Information security leader at cybersecurity marketplace Netify, shares this concern. He told Verdict: “Musk aims to integrate financial services directly into a social media platform, which could offer consumers convenience but raises privacy and security concerns.
“While super-apps have found success in more closed markets like China, the open American internet ecosystem presents significant challenges to replicating that model, particularly because of our political history with shared digital infrastructure.”
Hurdles to becoming a super-app
This does not mean that there is no chance of a cultural shift, but with a monetizable daily active userbase (mDAU) of 229 million as of 2022, X has a way to go before having the kind of leverage seen by Weixin.
The platform also has something of an image problem. Elon Musk has been accused of allowing hate speech to flourish on the site and has personally agreed with posts pedalling antisemitic conspiracy theories. GlobalData social media analysis shows that, even on the platform itself, only around 40% of posts about X or Twitter have been positive over the last year.
Advertisers are also troubled by these developments. X’s advertising revenue is estimated to have been around $2.5bn last year, 50% lower than in 2022. Musk recently telling advertisers pulling out to “go fuck yourselves” is unlikely to have helped, either. Advertising is currently X’s main source of revenue, making the move towards a direct-to-consumer business model more appealing.
Even if Musk is able to gather payment licences across the US, he faces further technical challenges in implementing a robust network, CEO of payment infrastructure provider Primer Gabriel Le Roux explained: “Musk’s move requires many considerations in regard to its current payment stack for the business to thrive and not alienate its current user base.
“Payment capabilities play a vital role in this type of business model as a super-app would need to handle transactions on behalf of sub-merchants, something that requires a significant user base, a scalable and reliable payments infrastructure, compliance with local regulations and a robust brand identity.”
