Speaking at a tech conference in Los Angeles last week, Alphabet CEO Sundar Pichai pointed to the risks the company faced with a heavy startup that came “out of nowhere.”
“Three years ago, none of us were talking about TikTok,” Pichai told the audience at the Code conference, describing the popular Chinese social media app as one of Alphabet’s “emerging” rivals.
A day later, when Snap CEO Evan Spiegel mentioned TikTok at the same conference, he seemed to be talking about an entirely different company. To hear Spiegel tell it, TikTok was a colossus, spending “billions and billions and billions of dollars” to capture market share and steal users away from apps like Snapchat.
The two seemingly contradictory reviews highlight just how much attention the Chinese video-sharing app has garnered and the concerns of Silicon Valley’s most powerful players. They may disagree on the specific nature of TikTok’s threat, but the tech industry’s major companies are united in their belief that their young competitor overseas is a clear and present threat.
With more than 1 billion users, Tik Tok has risen to the top of the world’s Internet social media services in just a few years. His ownership by ByteDance, a Chinese technology company with ties to the state, has added a geopolitical twist to what could play out as a normal shake-up in the competitive landscape.
In Silicon Valley, the subject of Tik Tok is rampant; At meetings and company meetings, everyone has an opinion.
“CCP is spyware, and we’re crazy to let it run in America—[it] It has nothing to do with competition, everything to do with influence and security,” tweeted entrepreneur and angel investor Jason Kalakanis. Chance When asked about Big Tech’s recent comments on TikTok.
“The algorithm on TikTok could easily tilt an election here in the United States by two percentage points,” Calacanis said. Or lean towards the war in Ukraine or the feelings for Hong Kong and Taiwan independence.
TikTok’s relationship with China has been scrutinized in the past, most notably when former President Donald Trump wanted the app banned in the US, but that attempt ultimately failed when a federal judge blocked the idea. To many observers at the time, Trump’s anti-TikTok crusade was exaggerated bitterness fueled by personal grievances over security concerns.
But as TikTok’s activity continues to grow and relations between the U.S. and China are strained, the tech industry has grown increasingly frustrated with the video-sharing app. In an attempt to blunt TikTok’s growth, established tech companies sometimes seem to veer from blaming the company to imitating the next one.
In March The Washington Post Facebook’s parent company Meta has reportedly hired a Republican consulting firm to spread stories that raise concerns about TikTok’s Chinese ownership. A few months later, in August 2020, he launched Meta Reels in the US (on Facebook and Instagram), a short-form video production similar to Tik Tok. Google-owned YouTube and Snap have each released their own TikTok equivalents called Shorts and Spotlight.
Both kids and adults are addicted to TikTok
None of those flipping features seem to have replicated Tik Tok’s success.
Monday Wall Street Journal It reviewed an internal research document that showed Instagram users watch Reels for 17.6 million hours each day, less than a tenth of the 197.8 million hours Tik Tok users watch each day. The document also revealed that about a third of the videos shared on Reels were originally created by another app, most notably TikTok, and contained a watermark or border indicating their origin.
Mark Cuban, entrepreneur and founder of Cost Plus Medicine, credits TikTok’s success, among other things, to its reliance on artificial intelligence to identify and share videos rather than the traditional “social graphs” of friends and acquaintances on Facebook and Twitter. And Snapchat.
“TikTok is shockingly efficient. They go where the content takes them,” Cuban said. Chance.
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Cuba points to licensing rights as a weak spot for TikTok. A rival in the pocket could lock down exclusive rights to music, movies and sports, he said.
“There are certainly many ways to beat TikTok,” Cuban said. “They don’t happen overnight.”
Tik Tok is expected to generate nearly $4 billion in revenue by 2021 and reach $12 billion this year, according to Bloomberg. That’s a fraction of the $28.2 billion in ad revenue that Facebook and Instagram parent Meta will generate in the second quarter of 2022, but ad industry insiders say TikTok has a tailwind.
said Jason Rapp, a partner at strategy firm Whisper Advisors. Chance That Big Tech is right to worry, Disney and Netflix or Meta and Snap.
“It’s not just kids who are addicted to TikTok, and advertisers are paying attention,” Rapp said.
Meanwhile, top U.S. consumer internet firms have been announcing cuts for months as the slowing U.S. economy and iPhone maker Apple’s new privacy features erode the ability to profit from targeted digital advertising. Snap laid off 20% of its workforce at the end of August, and Meta began randomly selecting layoffs by algorithm. That’s not to say that Tik Tok was completely unaffected by the fallout; The company made its layoffs in July as part of a “general restructuring of the company.” Wired.
With the US government’s crackdown on TikTok looming, established internet companies — themselves facing heightened scrutiny from antitrust regulators — could find a helping hand to fend off their Chinese nemesis.
TikTok insists that the app operates separately from ByteDance’s parent company in China and that no US user data is shared with operations in China. But U.S. lawmakers and some industry experts are unconvinced. Companies like Facebook, Google and Twitter are banned from operating in China. Calacanis, the angel investor, believes tech executives should take a similar stance to keep China out of the U.S. market.
But behind some of Silicon Valley’s Tik Tok obsession may be a recognition of the harsh reality of an internet business built and perfected on American soil. Consumer Internet businesses rarely come back after consumers move on to the next hot thing. A list of fallen Internet giants, including AOL, Yahoo and MySpace, speaks to a rapid and inexorable decline that can hit even the most powerful consumer Web businesses.
In the year Cuban, who made his first fortune selling a dotcom company to Yahoo in 1999, knows the unforgiving nature of Internet business.
“The other big social platforms seemed invincible at one point or another,” Kuba said. “Now they’re losing audiences to Tick.”
