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FOMO drives China's internet giants

News, 22 January 2015

BEIJING: A fear of missing out on the next big thing is driving the investment strategy of China's three internet giants, which are increasingly impinging on each other's patch as they strive to attract users.

An example of this trend comes in reports that ecommerce business Alibaba is looking to expand in social media by adding a new messaging feature to its Alipay mobile payment service.

That would take it into the territory currently dominated by social media giant Tencent and its WeChat app. At the same time, Tencent has been promoting WeChat's payment feature.

Reuters noted how Alibaba, Tencent and search engine Baidu have all recently invested huge sums in taxi-hailing apps and said group-buying services were likely to be the next battleground.

According to Taipei-based tech commentator Ben Thompson, it is all about gaining the most users and, consequently, the biggest returns. "Alibaba, Tencent and Baidu... don't want to miss out – or finish a distant second, which is just as bad – so they're investing heavily," he said.

The point was echoed by Duncan Clark, managing director of Beijing-based consultancy BDA. "What keeps people up at night is the fact that they might miss a certain trend or a certain hot company that really is going to bring all the attention and the users in," he said.

And in the world's biggest smartphone market, those users are largely mobile. "The fight to stay essential, to stay relevant, to stay on top of the home screen – it's what it's all about," Clark added.

Reuters also noted that promotions and marketing account for a significant proportion of investment in start-ups as companies chase users. In the first quarter of 2014, for example, Tencent's marketing costs almost doubled as it subsidised taxi-hailing app Didi Dache.

"It's right to question what are the limits of this," said Clark. "Not all these people can win."

Data sourced from Want China Times, Reuters; additional content by Warc staff