Updated: April 17, 2017 9:07:47 am
Snapchat is in the news in India for all the wrong reasons. #UninstallSnapchat is trending big and apparently Google Play Store ratings for the app have fallen. To use a 9gag meme phrase: India is triggered. The reason: Snapchat CEO Evan Spiegel is alleged to have said the following statement in 2015: “This app is only for rich people… I don’t want to expand into poor countries like India and Spain.” As of now, it is hard to confirm whether Spain is triggered too, about being clubbed as a ‘poor country.’
For Snapchat, the report doesn’t come at a good time. The company just went public with its IPO and raised over $3.4 billion, but the competition is winning. Instagram Stories now has 200 million daily active users, much more than the 158 million DAUs on Snapchat. Plus it doesn’t help that reports over the last few months have indicated that Snapchat Stories have seen a fall in views for the big creators.
So what exactly is the latest controversy about? We answer all your questions.
What exactly did Spiegel say? Some context please.
Snapchat CEO Evan Spiegel is alleged to have made this statement in 2015, according to a report in Variety. The crux of the statement is this: Snapchat isn’t an app for poor countries, where people might be on lower end phones, might not have high-end connectivity all at times. Also Spiegel supposedly cites India and Spain as examples.
The context for this: A lawsuit filed by a former Snapchat employee called Anthony Pompliano. Note Pompliano was hired by Snapchat from Facebook, and even suggested ways to fix the problem of the app not doing well abroad.
But Spiegel wasn’t interested, according to the report on Variety. While the ‘India is poor’ comment might be sparking off some outrage, the real issue at hand is the ‘number fudging,’ the context within which this remark was made.
According to Pompliano’s lawsuit, Snapchat claimed it had 100 million users, which was higher than the 97 million counted by Flurry. Also according to the lawsuit, Snapchat was growing much more slowly, in single digits and under 5 per cent, rather than the double digit growth it was claiming.
What is Snapchat’s response? Did Spiegel really make this comment?
Snapchat has replied to the lawsuit and denied all charges. Snapchat’s attorneys are quoted as saying, “The simple fact is that he (Mr Pompliano) knows nothing about Snap’s current metric.” Either way, it is hard to confirm if Spiegel actually made this statement.
Snapchat is known for being secretive about its products and very rarely gives insights on numbers. Spiegel exercises a stringent control on the company and its core product. In fact, even after the IPO both co-founders Spiegel and Bobby Murphy still have majority control over the company.
So what’s the lawsuit about?
The lawsuit by Pomplaino alleges Snap Inc, the parent company of Snapchat lied to advertisers about its numbers, and didn’t have the kind of growth it claimed. His charge is serious since it is alleging that Snap Inc bloated numbers, which investors and advertisers will be forced to consider.
Snap Inc is fighting this, and has now published some new documents in this case, and according to a report in Fortune, the ‘company says it has nothing to hide.’ Though it did try and keep these documents sealed for sometime, but appears to have given up now.
Snap Inc also alleges Pompliano is a disgruntled ex-employee, who was fired in three weeks. It also wants to move the matter into arbitration, which would mean alternate dispute redressal. For Snap Inc, the lawsuit will mean greater investor scrutiny.
So is Snapchat really an app for rich people?
Like we have said, there’s no way of proving Spiegel actually made the statement. But if you look at Snap Inc’s SEC filing, then it is clear the app doesn’t do well on Android phones and in countries where internet connectivity is poor.
In the “Risks Factors” section of Snap Inc’s SEC filing, here’s what it says about poor internet connections.
“In addition, because our products typically require high bandwidth data capabilities, the majority of our users live in countries with high-end mobile device penetration and high bandwidth capacity cellular networks with large coverage areas. We therefore do not expect to experience rapid user growth or engagement in countries with low smartphone penetration even if such countries have well-established and high bandwidth capacity cellular networks. We may also not experience rapid user growth or engagement in countries where, even though smartphone penetration is high, due to the lack of sufficient cellular based data networks, consumers rely heavily on Wi-Fi and may not access our products regularly.”
If you look at their statement, India typically is not a market where they will do well. Sure all of a sudden 4G is popular thanks to Reliance Jio, but our internet connectivity is far from excellent.
Also many users in India are first time smartphone users, on low-end Android phones, and prefer to conserve data. This also explains why people love WhatsApp or Facebook, which have made sure their apps work well in the country, even with 2G connectivity.
For its part, Snapchat does require a constant and heavy duty internet connection, since the app is so geared around uploading and consuming video content. It has no ‘data saver’ mode as such, though there is a ‘Travel mode’ which you can use to ensure video is loaded only when you tap on the Story.
The other problem for Snapchat: Android has never been their priority and that’s what a majority of people in India use, in fact most of the developing countries, Android reigns supreme.
Again the SEC statement reads, “To continue growth in user engagement, we will need to prioritize development of our products to operate on smartphones with Android operating systems. If we are unable to improve operability of our products on smartphones with Android operating systems, and those smartphones become more popular and fewer people use smartphones with iOS operating systems, our business could be seriously harmed.” In Snapchat’s own words, their success right now is dependent on iOS being popular.
So then why is this app a big deal? They don’t seem to be a chasing a mass market
Snapchat might not have the numbers like Instagram or Facebook or even WhatsApp. But it has managed to find popularity with young users, who are sharing more and more on the platform. That’s clearly got Facebook scared, which did try and buy out the app in the past. Spiegel refused Zuckerberg’s offer of $3 billion.
Filters, Stories, Vertical videos, articles that load instantly, Spectacles that have gotten popular: Snapchat has made a lot of formats mainstream, and that’s why the competition is trying so hard to kill it.
Of course, Snapchat is facing competition from Instagram, and it doesn’t help the app has a complicated UI, which most adults can’t comprehend. While #UnInstallSnapchat might trend for now, the app certainly isn’t going to die out anytime soon.
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