My switch from iPhone back to Android a couple of years ago was seamless - the reason being that most of the apps I’ve used are available on both platforms. And if you haven’t invested in other aspects of either platform, you don’t really have switching costs as there are tools that help with the transition. Which brings me to the observation that triggered this article: we spend most of our screen time on 5-6 apps a day (source: TechCrunch) and the majority of smartphone users leave it at 20 apps per month according to ComScore (Source: ComScore). If we take a look at what these most used apps are, we will find out that it’s mostly Facebook (facebook and Instagram) as well as Google (Youtube, Maps, Search). This brings me to my second point: If we are contempt with these apps, then I suspect there could be room for alternative platforms to emerge that could focus on key apps (and ignore the rest) because some of these apps are platforms themselves. A herrectic would say, maybe we can now go back to feature phones that run the most important apps. I make this case because of one key observation coming from Asia where Alipay and WeChat have so much channel power that they more or less dictate the success of a device in the market - or basically, if you can’t install Alipay or WeChat, you won’t succeed. In the western hemisphere, Facebook is such an app that is essentially a platform and there are some similarities between Alipay, WeChat and Facebook (for example, number of monthly active users). So this brings me to my final point: the device makers. With the exception of Apple, everything is pretty much Android based: Google’s operating system for smartphones. The reason for that is quite simple: it’s essentially free if you agree to the terms and conditions of Google which basically says that you must buy into the Google service. The big exception to this is the Chinese market. The Chinese have a slightly different version of Android because of the Chinese rules (the great firewall won’t allow access to Google services) which means, in China, there are app stores from each device manufacturer and the big players run their own ecosystems. This is very different from what we experience in the western world with the Google Play store. Only Amazon has its own App store.
Ok, but why is all this important and how is it relevant for commerce - I would like to propose the following thesis:
The anti-competitive ruling of the European union against Google (source: Google), and Google’s subsequent complying (source: Business Insider) by no longer enforcing requirements for Google services (and charging a fee if the device maker wants to offer Google’s services) opens up the path for Android device makers to not only bring their own ecosystems (from China and Korea) but also their own wallet systems to Europe. So instead of the Google Play Store, each device manufacturer could put its own app store or that of a third party. And likewise, think of Google Pay but now you have Samsung Pay (already in Europe), Huawei Pay (currently China and Russia), Mi-Pay (Xiaomi; currently China and India), Meizu Pay and other payment wallets that are no longer constrained by Google rules. For example: these manufacturers could restrict access to NFC, similar to what Apple has been doing with Apple Pay, and only allow their wallet for NFC payments.
But coming back to the original thought that triggered this article. If we believe there will be a world without the Google App store (in Europe at least) and a focus on several key applications, then it’s likely that we will see more innovation from device manufacturers that are no longer bound by Google’s requirements. However, key applications such as Alipay, WeChat, Youtube (Google) and Facebook will be able to force some changes on to the device manufacturers, because of their relevance and could become dominating platforms themselves that might utilize the smartphone in news ways. One of these new functions might just be a PSD2 compliant payment wallet.
My $0.02:
The mobile space continues to be a fast moving industry thanks to changes in regulatory frameworks and the European Union's aggressive stance towards GAFA. The payment landscape in Europe will - already intertwined with mobile devices - thus become more fragmented and most likely we will see many more ways in how we pay.
What say you? Leave a comment if you want to contribute more color.
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