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U.S. apps take more cues from China

Data: Yahoo Finance and Chinese Internet Report from South China Morning Post; Chart: Axios Visuals

A slew of Chinese-inspired smartphone apps and products are flourishing in the U.S., adding new Chinese influences to American culture and business just as the trade conflict between the two countries intensifies.

Why it matters: U.S. tech giants that once inspired Chinese products in the era of PCs and the web are now borrowing moves from East Asian counterparts, mimicking their smartphone apps and innovations, as a recent in-depth China Internet Report by the South China Morning Post documents.

Driving the news: Facebook is creating an app called Thread that aims to make it easier for users to chat more intimately and frequently with their closest friends on Instagram, The Verge reports.

  • The concept, reminiscent of Snapchat, was pioneered by WeChat, the chat app owned by China's Tencent.

For Chinese users, WeChat has become a "super" app, one that broadly expands across many different services. WeChat started as a messaging app but now offers everything from ride hailing to tickets to gaming.

  • Facebook Messenger has more broadly been mimicking WeChat over the past two years. Messenger has gone from focusing on private messaging between Facebook friends to a one-stop shop for payments, stories and games.

Shopping apps in China have also been heavily copied by U.S. tech giants like Amazon and Instagram.

  • Chinese shopping giants like Alibaba-owned Taobao and publicly-traded Pinduoduo that have pioneered the combination of ecommerce and social media are now being recreated for U.S. users by American shopping giants like Amazon and Instagram.
  • Amazon launched Amazon Live, a feature that allows users to unbox and test new purchases via live-streamed video. Instagram this year launched Checkout with Instagram, a feature that allows users to buy products within its app.

Short video: The recent explosion of TikTok in the United States, which is owned by Chinese company ByteDance, has been a wake-up call for U.S. tech giants like Snapchat, Facebook and Instagram. TikTok grew its U.S. footprint first by acquiring U.S. karaoke company Musically in 2017 and then by spending roughly $1 billion on U.S. marketing.

  • Facebook launched a TikTok competitor last year called Lasso which lets users create viral short videos that often feature lip-syncing.

The big picture: Innovation on the smartphone has flourished in China because phones were the first broadly-adopted screen there.

  • Chinese companies had to build most of their new products and innovations for a smartphone-driven society, while U.S. companies had already built out services and products for the consumer PC market.

Be smart: Apps for social media, messaging and video are relatively easy for U.S. tech companies to replicate — they're less regulated by local governments than finance, hardware, or transportation, and less tied to physical supply chains that can be subject to trade-war tariffs.

What's next: The "BAT" companies, Baidu, Alibaba and Tencent, have been increasingly investing in new companies that act as extensions to their services.

" If you're BATs, you want to invest in things you're not good at. For the most part, their core competency is social media, so they own the data. They want to make sure people use more data elsewhere — they see it as a protective shield. It helps them neutralize competitors."
— Humphrey Ho, managing director of Hylink USA, China's largest independent digital advertising agency
  • U.S. companies are now doing the same thing. Facebook is creating Threads and Lasso. Amazon was at one point creating two social media networks — Spark, a shopping social feed, and Anytime, a messaging app.

What we're watching: Major Chinese apps have been increasingly investing both in U.S. tech companies and also in Chinese tech rivals in order to expand platforms for users to access their services. Chinese tech giant Tencent, for example, has invested both in Snapchat and Swedish music service Spotify.

Yes, but: A deepening trade conflict between China and the U.S. could make that type of industry investment harder.

  • Under the Trump administration, we've seen crackdowns on Chinese acquisitions by the federal government's interagency Committee on Foreign Investment and discussions of tighter export controls.
  • If the trade war escalates, software creators in both China and the U.S. could find it harder to build on each other's innovations.