Social media companies’ super-app dreams may lead further into regulatory nightmare

• 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.
• Social media companies are viewed as data monopolies in whichever sector they move into, increasingly at odds with antitrust and data privacy regulations.

Social media companies’ dreams of pursuing super-app aspirations could attract even more regulatory scrutiny, an industry expert said.

“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,” Laura Petrone, Senior Analyst at GlobalData, said.

Social media companies such as Facebook and Google will increasingly diversify away from ad-funded business models and position themselves as the gateway through which users can access multiple services, blending social networking, e-commerce and entertainment.

Petrone said that 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,” she said.

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

However, she said that social media companies 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 introduced ex-ante regulations such as strict and transparent rules applied to digital platforms before engaging in any anti-competitive behaviour.

 “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 favour of imposing minimum conditions to avoid monopolies,” she said.