This “Chat” app, formerly known as Google Messages, will support the RCS standard that the mobile industry have been lukewarmly supporting for over 10 years, but without enough real push to make it happen. Google’s announcement does nothing to change that situation: they have basically stopped Allo due to a — relative — lack of traction, but nothing new points to better chances for this new Chat app to bring success to RCS.
I will not discuss the reasons behind this success being unlikely because there are great analysis out there that do that job just fine. I would rather suggest reading Dean Bubbley’s take on RCS from last year, which not only is still relevant, but reminds us that his own analysis from three years ago is also still valid today:
Tsahi Levent-Levi has also written a great post about this. One of the interesting points of focus there is how RCS is lacking end-to-end encryption (which comes from the regulatory constraints for telecommunication operators, which have to be able to provide lawful interception to authorities, incompatible with e2e encryption), while most of the existing messaging solutions out there today offer this. It is quite debatable if there is a market demand for end to end encryption by “regular” users, but offering a new communication service that is less secure and less privacy-concerned than the current incumbent offerings feels wrong given the current zeitgeist:
So all in all is clear that the chances for RCS to compete with WhatsApp or even iMessage are not good. That’s why I wanted to offer a small addenda to this discussion looking at why Google’s goal is not to beat WhatsApp (or so they think).
When I say that Google’s RCS does not want to compete with WhatsApp, it is because I don’t think they expect to have a relevant impact in personal communications. Yes, they are offering all the features such a channel expects to have, and to some extent they are doing this to satisfy the expectation of operators that believe they will get back people to use their communication services, and bring “balance” to that ecosystem.
But what Google really wants is to reinforce their core business: advertisement. Because the ad business is about sending messages from brands (and companies) to potential customers.
This “advertisement” capability is what RCS will bring to Google, via a key element of their solution: the Hub for carrier aggregation.
Google’s RCS solution has three pieces:
That last piece is very important, because one of the big problems for RCS (and any other carrier-based communication service) is interoperability.
Interoperability means ensuring that a message sent from an user in carrier A to an user in carrier B works, moving from A’s servers and infrastructure into B’s servers and infrastructure. This may sound like an obvious thing in the Internet age, but in the carrier world, where some traffic exchanges have requirements for charging and settlement, and when complex standards leveraging decades-old legacy systems rule, it is not.
Interoperability has been a huge issue preventing some services to be successful. For instance it was for MMS, the “Multimedia Messaging System”, which was an evolution for SMS that allowed sending photos (and a lot of other complex things that no one used, like slideshows). It took years to be able to send photos successfully between operators within the same country, and still today I would be careful when using it to send a photo internationally. Many things affected its failure (including pricing), but the unreliability that poor interoperability brought was up on the list.
This becomes an exponential problem if you think that every operator in the world must ensure interoperability with every other operator in the world. Those are a lot of tests.
But Google can help with that, becoming the Hub to which every operator in the world connects, ensuring that once connected to the hub, things will work with every other operator already there.
It is true that Google’s Hub can be a great simplification. But it also puts Google in a really interesting position. Because the Hub becomes the point from which every operator in the world, and their customers, can be reached using RCS.
If you are a business wanting to reach your customers using RCS (which may mean that you are a mythical animal, but we will discuss that later), not having to integrate with all possible carriers that give access to them, and just connect to Google sounds great. And you may already have a business relation with Google if you are buying ads from them, so that may be nice too.
This is the key for Google not actually trying to “own” the RCS service, or even the apps. They can leave that to carriers or device manufacturers (although they would prefer to own that too) as long as they control the Hub.
The Hub is the most valuable piece for the advertising business, because it can give access and control of the whole “RCS inventory” worldwide. And if every carrier in the world supports RCS, and every Android device in the world supports the Chat app (either Google’s or anyone else’s) that can be a sizable inventory.
It is that size which makes the GSMA predict a $74 billion A2P business for RCS in 2021. But that would be a business controlled by Google , who will do revenue share with carriers, yes, but will be the individual company holding the biggest share of that pie.
And they don’t care that that users may not really use RCS for personal messaging (P2P — person-to-person), as long it becomes a default preinstalled entry point available in al devices. It may be an undemanded feature in phones, but still a valuable inbox for business to direct communications to.
People may still use WhatsApp to chat with each other, but will get their bank notifications via the Chat app, and interact with their customer service there.
Or will they?
The problem is that even having the app on all Android phones and the RCS service connected to all operators via Google’s hub does not significantly improve the chances of RCS becoming a relevant channel for business communications.
From the users perspective, the risk is that an inbox that is really only used to receive business communications can easily become a spam folder. In my personal experience when dealing with customers attitude towards communication applications, I have seen that countries in which the SMS channel has been abused for marketing communications led people to turn off the SMS notifications and ignore that “app” altogether. I remember a customer just realized he had received a SMS from his girlfriend two weeks ago when showing us the amount of spam he got through his SMS inbox. He didn’t realize that message existed before because he only expected “real” communications coming via WhatsApp. A spam folder is not a good selling channel for businesses.
From the devices perspective, as long as Apple does not support RCS, it will still not be an universal solution. And considering iPhones tend also to target higher income segments, for many business not being able to reach that base makes it a really bad solution. Business could do a dual integration, supporting an RCS channel for customers on Android and an iMessage channel for customers on iPhone, but is it worth it for them to invest in that complexity if they can support all devices with a single solution? And that single solution may come from competitors.
From the competitors perspective, there are two different fronts to consider:
And this will be the main competitor for Google. Because Google may not be expecting to fight with WhatsApp with RCS, but they will have to fight with WhatsApp for Businesses in this market. And interestingly enough, this is a competitor — Facebook — also in the advertising business, which may have also a relationship with customers in this space.
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