Question

According to an exclusive report by KPMG, a world-renowned accounting organization, apps like WeChat and Alipay in China, and Grab in Malaysia are what we termed as ‘super apps’. These apps usually bundle together online messaging (similar to WhatsApp), social media (similar to Facebook), online shopping (like Shopee), e-wallet (like Touch ‘n Go eWallet), and services (like Uber). These super apps are designed with one thing in mind—to monopolize users’ time so that there is no need for them to use a variety of apps.

a)How does the monopoly of super apps result in the transfers of income? (5 markah/marks)

b) Discuss how the big data obtained by these super apps can be used to collect all consumer surplus for themselves. (5 markah/marks)

c) Is super app can be considered as a price maker? (5 markah/marks)

d) In lieu of (c), will a super app always charge the highest possible price at all times? (5 markah/marks)

e) “Being a super app guarantees economic profits.” Discuss whether this is a valid statement. (5 markah/marks)

f) What are some ways that existing super apps may attempt to prevent rivals from entering into the market? Discuss an example. (5 markah/marks)

g) How does super app compare with single-purpose apps in terms of price, output, and efficiency?

Answer 1

a) Since these super apps create a monopoly and bundle together various services such as messaging, shopping, e-wallet, social media etc. thus there is transfer of income from those other apps which sell these other services seperately as some of there consumer base shifts to these super apps.

b) These super apps collect a lot of big data in terms of consumer preferences , email ids , shopping preferences etc and so these data obtained can be used by the companies to augment there surplus . Consumer data is a crucial in the data industry as it helps them formulate production, marketing and advertising strategies.

c)These super apps if they obtain a significant number of active users who prefer using super apps for all purposes instead of using seperate apps for different purposes, then after reaching a significant market share they can act as price makers.

d) it is difficult for these super apps to charge the highest possible price at all times becuase if they do so , consumers will shift to the other alternatives available to them in the market because it is certain for them to use cheaper alternatives instead of paying a higher price.