Super-app dream may lead social media companies further into regulatory nightmare, says GlobalData

Social media companies such as Facebook and Google will increasingly diversify away from ad-funded business models while at the same time chasing dreams of being a ‘super app’, according to GlobalData. However, the leading data and analytics company notes that, in pursuing super-app aspirations, they could end up attracting even more regulatory scrutiny.

GlobalData’s latest thematic report, ‘Social media – Thematic Research’, states that Social media companies will increasingly position themselves as the gateway through which users can access multiple services, blending social networking, ecommerce and entertainment.

Laura Petrone, Senior Analyst at GlobalData, commented: “Super apps are the future of social media strategy. Pioneered by Tencent in China, the super-app model is now being copied across the world, with Facebook leading the pack. The most successful social media companies have built large ecosystems of complementary products and services around their core operations. Their vast troves of data and immense scale make it possible for these super platforms to expand their services into new markets, some of which are traditionally dominated by non-digital firms.”

One example is Facebook’s expansion into financial services and cryptocurrencies, while another is Tencent, which has moved into lending and wealth management.

Petrone continues: “However, social media companies face a dilemma. In pursuing super-app aspirations, they could end up attracting even more regulatory scrutiny. They are viewed as data monopolies in whichever sector they move into, increasingly at odds with antitrust and data privacy regulations.”

Social media companies have come under fire for stifling competition and face an unprecedented level of scrutiny on both sides of the Atlantic. The EU has moved to introduce ex ante regulation such as strict and transparent rules applied to digital platforms before they engage in any anticompetitive behavior.

Petrone continues: “Ex ante regulation is as a desirable solution for antitrust regulators worldwide. As a result of this new legislation, enforcers would abandon lengthy proceedings against large platforms in favor of imposing minimum conditions to avoid monopolies.”

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