September 1, 2020

Is the Clock Ticking on TikTok?

2020 has been a rollercoaster of a year for TikTok (and for all of us, really). After huge growth in 2019 fueled by Gen Z, TikTok hit the accelerator this year as users sought quarantine distractions. But the ride has not been a smooth one as TikTok sparked an increasing number of privacy and censorship concerns, leading to a ban in India and scrutiny from the U.S. government.

In the past month, Trump has issued an executive order that requires ByteDance to either sell or shut down TikTok by November 12th. Suitors are lining up, with a $20 billion sale to Oracle rumored last week. Walmart has also teamed with Microsoft as a potential purchaser.

Let’s take a deeper look at the reasons behind the ban, the potential outcomes, and the competitors hoping to pick up TikTok’s audience.

TikTok, the Latest Victim in Trump’s China Tirade
President Trump recently issued an executive order requiring ByteDance to sell or spinoff TikTok by November 12, lest it be banned in the United States. Ever eager to attack China, Trump accused TikTok of being a national security threat and demanded that ByteDance destroy U.S. user data. (More than one-third of TikTok’s users are under 14, which makes privacy issues even more dicey.) ByteDance had previously filed a legal challenge to Trump’s order.

This is not the first time a major nation has snubbed China’s online prowess. In June, for example, India banned TikTok and at least 60 other Chinese-owned apps. This is also not the first Trump administration move to ban a Chinese social network. In early August, Trump issued an executive order banning WeChat from the U.S. market. The order would trim 19 million U.S. users from WeChat’s roles, including many Chinese expats and Chinese Americans who connect via the app to family overseas. Since China blocks all U.S. social media apps, WeChat was among the only ways that Chinese expats and Chinese Americans could remain connected with their overseas family.

Some argue that TikTok has aided efforts by the Chinese government to censor content and spread misinformation, but neither concern is unique to TikTok. Others suggest that this is just the next step in the burgeoning tech cold war between the U.S. and China: a move by the U.S. designed to pay China back for its longstanding ban on U.S. social media companies. This ongoing back and forth makes it obvious that, depending on the political tides in November, relationships with China will continue to impact social media in the U.S.

Players Stepping Up to Fill TikTok’s Space
As the threat of a TikTok ban looms, its super-users have openly discussed other apps they might move to, including Instagram Reels, Snapchat, Triller, or Likee. Add to this an ever-growing list of smaller players like Dubsmash, Byte, Zynn, Clash, Roposo, and Mitron. Given this ever-widening field, now is the perfect time to consider the contenders vying for TikTok’s audience.

Instagram Reels
To compete with TikTok, in early August FACEBOOK-backed Instagram launched Reels, an under-baked new micro-video feature attempting to clone the built-in editing and effects TikTok users enjoy. In fact, Reels is essentially a quick and less-thorough video editing tool within Instagram.

Reels permits users to organize clips, adjust speed, show lyrics, or use a variety of Instagram Stories features like filters, text, and stickers. While Reels’ editing tools are inferior to TikTok’s, the feeds and stories are still teeming with content creators trying out the new features.

Snapchat was the first to introduce disappearing Stories, buckling under its clone Instagram Stories. In an attempt to reposition itself as a TikTok competitor, Snapchat recently announced that it would work closely with music publishers. Music is, of course, the driving force of TikTok, so the combination of licensed music and Snapchat’s existing 250-million younger users make it one of the TikTok’s stronger competitors.

Triller has been around since 2015, starting as an app to make miniature music videos. It is celebrity-backed, including investments from Snoop Dogg, Lil Wayne, and Hollywood’s Ryan Kavanaugh. Triller has grown four-fold in the last year to 250-million lifetime downloads (compared to TikTok’s two billion). Triller also has a Snapchat integration.

Triller’s main differentiator is that it edits videos using AI, rather than being an editing platform unto itself, like TikTok. Videos are typically 15-30 seconds, but are allowed to be up to two minutes. Triller has enjoyed headlines and an uptick in downloads as users consider a post-TikTok world.

Note: Rumor has it that Triller and London-based Centricus Asset Management offered $20 billion for TikTok’s assets in the U.S., Australia, New Zealand, and India. On Monday, ByteDance denied these rumors.

Likee, with 150-million monthly active users, is similar to TikTok, but allows content creators to receive gifts and payments from their audience. Likee is growing faster than other potential TikTok replacements, adding 7.25-million downloads in the past six months. Of course, TikTok was downloaded almost 50-million times in the same time period. However, Likee is also owned by a Chinese company, so any short-term success may be short-lived. (Likee was banned alongside TikTok in India.)

Parting Thoughts
Social networks come and go for many reasons. Once thriving social networks like Vine, Digg, and Tumblr are shells of their former selves, to the extent they exist at all. TikTok may survive Trump’s ban, but not cloning by Instagram.

This is an important reminder for all marketers and content creators that we rent, not own, our social media profiles and followers. To diversify, build audience across multiple channels and focus on multiple marcom platforms, such as email, SMS, and push notifications that aren’t beholden to third parties.

Next Analyst Insight…

If Trump’s order is successful, it is more likely that, rather than shut down TikTok outright, ByteDance will sell off its American operations. Next week we will discuss the tech-media firms sparring for these assets and the who we believe will win out.

Lauren Kozak, the author of In Search of an Audience: Quibi’s Post-Pandemic Prospects, User Adoption and Trends in Social Streaming, IGTV, & Facebook Watch, and The Ascent of the Social TV Engager, is our Senior Advisor on Social Media, Analytics, and User Behavior. She has previously held positions for the Los Angeles Times, Tribune Publishing, and Britney Spears.

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