According to Scott Galloway, co-host of the Code technology conference, there were two big themes at the event. The first was “Tik” and the second was “Tok”.
Despite the line-up in Beverly Hills this month reading like a who’s who of the American technology world — including Tim Cook, the Apple boss, Evan Spiegel, of Snap, Sundar Pichai, head of the Google-owning Alphabet, and Bob Iger, the former Disney boss — TikTok dominated discussions.
The Chinese-owned app is fighting a battle on two fronts: against its competitors on one and against the suspicions of western governments on the other. Both are unhappy with its runaway popularity.
According to Enders Analysis, the media consultancy, TikTok has a billion users outside China, a number that continues to grow. The figure remains below Facebook’s 2.9 billion users, but the ByteDance-owned TikTok has captured our engagement (and the related advertising spending) with its clever editing functions, which allow users to add all sorts of music and sophisticated special effects to create slick, funny and creative videos. Its user base is markedly younger than that of its larger rival.
Numbers from data.ai show that people spend more time on TikTok than any other social media platform. A recent report by Ofcom found that young adults were spending more time on TikTok than they were watching traditional television. And even in the face of a litany of well-publicised concerns — about its Chinese ownership, users’ data being shared with the Chinese government, the dangers of its addictive algorithm, the way its workers are treated and the risks surrounding certain content that it shows to young people — its popularity continues to grow.
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Falling advertising revenue hit Snap and Facebook hard in their latest results, but not TikTok. Insider Intelligence expects TikTok’s global advertising revenue to triple this year to more than $11.5 billion, overtaking the combined ad revenues of Twitter and Snap. According to Enders, it will pull in £500 million in Britain alone.
Rivals are struggling to imitate its success. A leaked document obtained by The Wall Street Journal revealed that an attempt by Instagram, owned by Facebook, to challenge TikTok’s dominance in short videos on social media, known as Reels, is stalling. Instagram users cumulatively are spending 17.6 million hours a day watching Reels — less than a tenth of the 197.8 million hours that TikTok users spend each day on the Chinese platform.
In front of the Code audience, Spiegel bemoaned the money that ByteDance had spent on self-promotion and its algorithm. “No start-up could afford to invest billions and billions and billions of dollars in user acquisition like that around the world,” he said.
Mathias Döpfner, chief executive of Alex Springer, the giant German media group, said: “TikTok should be banned in every democracy. Think it’s silly not to do that? We cannot enter China . . . with Facebook, with Google, with Amazon, with other platforms, [so] why would we allow them to play such a dominant role in our free-market economy?”
Users do not seem bothered by the political outcries. “I think people find that TikTok is far better, with its algorithm serving them the content that they want more frequently and more consistently,” Matt Navarra, a social media consultant and industry commentator, said.
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“Meta is also struggling to integrate Reels into the whole Instagram experience. They’ve flooded the app with Reel videos. You can’t avoid them in many ways, but it’s not seemingly working. I think they also have a lot of other things going on in the app for people to kind of be distracted.”
Katy Howell, chief executive of Immediate Future, a social media agency, said: “TikTok is also seen as more authentic. It has definitely got Gen Z on board. If you watch TikTok versus Reels for five minutes, you’ll see that TikTok is more human, real, raw, more genuine.”
A Meta spokeswoman said the data about viewing hours was outdated and that month-on-month Reels’ engagement was up.
Facebook was caught flat-footed by its rival, according to Joseph Teasdale, head of technology at Enders Analysis. “TikTok is not really social,” he said. “The chances are your friends aren’t good at making videos — you’re there to see the good stuff, and so in this regard Facebook has no advantage. TikTok is more like a personalised TV channel.”
There is unease in Washington about the platform’s dominance. Vanessa Pappas, TikTok’s chief operating officer, was one of several technology bosses questioned by the Senate homeland security and governmental affairs committee last week. In a series of confrontational exchanges, senators queried the company’s links to the Chinese state. When Pappas was asked whether employees were members of the Chinese Communist Party, she dodged the question. She tweeted later: “I take to heart the responsibility to uphold TikTok as a safe, secure and welcoming space for our community.” The committee did not seem so sure.
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President Biden has withdrawn Donald Trump’s executive order seeking to ban TikTok, but he has ordered an inquiry into foreign-owned apps and could yet take action against the Chinese company. BuzzFeed News reported that US data from TikTok was still accessible in China earlier this year. In Britain, parliament has closed its TikTok account under the instruction of MPs, who had demanded “credible assurances” that Beijing would not seize control of data from the account.
In a sign of growing anti-China sentiment, the US government recently banned the export of semiconductor equipment to factories in China that produce more advanced chips, unless the sellers obtain a licence. It is expected to expand this to include the equipment used for artificial intelligence.
In response to concerns about Chinese interference, TikTok has drafted in Oracle, the American software business, to manage its data in US data centres “as part of our commercial relationship to better safeguard our app, systems and the security of US user data”. It also has established a department “with US-based leadership, to solely manage US user data for TikTok. Together, these changes will enforce additional employee protections, provide more safeguards and further minimise data transfer outside of the US.”
Will it be enough to placate the regulators? It seems unlikely.
When it comes to competition with other social media companies, Teasdale said TikTok remained an existential threat. “Social media businesses do not just fail, they fade away when something comes along that makes their business model redundant.” This is what they are most afraid of.
