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The rise of TikTok: why Facebook is worried about the booming social app – The Guardian

Muhammad Mubeen by Muhammad Mubeen
2 years ago
in Business, Small Business
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The rise of TikTok: why Facebook is worried about the booming social app – The Guardian
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Chinese-owned video platform is set to overtake the advertising scale of Twitter and Snapchat combined
TikTok: five of the UK’s favourite videos
TikTok is on track to overtake the global advertising scale of Twitter and Snapchat combined this year, and to match mighty YouTube within two years, as trendsetting teens and young adults make it the hottest social app of the moment – and Facebook is worried.
The Chinese-owned video-sharing platform is forecast to catch up with YouTube by 2024 when both are predicted to take $23.6bn (£18.2bn) in ad revenue, despite TikTok being launched globally 12 years after its Google-owned rival.
Helped by unparalleled moments of cool at the height of the pandemic – Idaho labourer Nathan Apodaca skateboarding along to Dreams put Fleetwood Mac’s album Rumours back in the top 10 more than four decades after its release – TikTok’s surging growth belies the metronomic pace of its name.
Last year, it overtook the global ad take of Snapchat, previously the digital hangout of choice for teens and twentysomethings, and by the end of this year it will have surpassed that of Twitter. This year it is predicted to triple worldwide ad revenues, to $11.6bn, more than the $10.44bn for Snapchat and Twitter combined.
“TikTok’s user base has exploded in the past couple of years, and the amount of time users spend on the app is extraordinary,” says Debra Aho Williamson, principal analyst at Insider Intelligence, which compiled the ad spend forecast. “It has moved well beyond its roots as a lip-syncing and dancing app. It creates trends and fosters deep connections with creators that keep users engaged, video after video.”
TikTok landed its billionth user in 2021, four years after global launch, half the time it took Facebook, YouTube or Instagram, and three years faster than WhatsApp. Earlier this week, analysts at data.ai revised a prediction that TikTok would hit 1.5 billion monthly active users this year, after its analysis revealed it had surpassed that milestone by 100 million users within the first three months.
The company is winning the battle for the “sweet spot” of social media users, those in the 18- to 25-year-old demographic where Facebook is seeing its biggest declines, with parent company Meta trying to stem the exodus by attracting them to stablemate Instagram.
TikTok is also becoming increasingly addictive. Despite the platform supposedly being restricted to those aged 13 and over, about 16% of three- and four-year-olds view TikTok content, according to research commissioned by media regulator Ofcom. This rose to 29% of all children in the five- to seven-year-old age group.
Last year the typical TikTok user spent 19.6 hours on average per month on the app, according to data.ai – equalling Facebook, the global leader in time spent by users on social media. For TikTok, this represents an almost fivefold increase in just four years, up from 4.2 hours in 2018.
“Facebook has always been the biggest competitor in this space for dominating users,” says Sam O’Brien, the chief marketing officer at performance marketing company Affise. “But it seems it can’t quite tap into convincing TikTok’s loyal users to revert back to its platform. TikTok has figured out its own way to give the platform an addictive quality.”
Mark Zuckerberg’s Meta still dominates the market – Facebook has 2.9 billion monthly active users, and Instagram another 2 billion, with Insider Intelligence putting their 2024 ad revenues at $85bn and $82bn respectively. Even so, it emerged last month that fear of TikTok had led it to hire a lobbying firm to paint the company as the “real threat, especially as a foreign-owned app”.
“Meta clearly sees itself in a battle against TikTok for the hearts, minds and attention spans of millennials, a significant chunk of the social media market,” says O’Brien. “TikTok has experienced a staggering growth of users since the onset of the global pandemic, taking over a huge chunk of its competitor’s audience.”
Meta’s tactics aim to exploit the suspicion promoted under the Trump administration that Chinese companies, from telecoms giant Huawei to TikTok’s parent ByteDance, pose a national security threat as potential conduits of personal data to Beijing.
Two years ago, India, one of the world’s biggest markets for social media usage, banned 59 Chinese apps, including TikTok. However, Trump’s plans to force ByteDance to sell its international operations to a US firm, such as Microsoft or Oracle, petered out after he lost the US presidential election.
Nevertheless, suspicions remain among many users including those in the UK, which has banned Huawei equipment from being used in mobile phone networks. Last year, research found that almost a third of all Britons were concerned that TikTok might share their personal data with the Chinese government. Among those aged 18 to 34, a third believed it would hand over their data on request from China.
ByteDance has also come under pressure at home as Beijing has looked to rein in the power of the country’s tech titans. Billionaire co-founder Zhang Yiming unexpectedly announced in May that he would step down as chief executive, and in November relinquished the role of chairman, as ByteDance underwent a major restructure breaking it into six business units.
Nevertheless, the company remains in rude health and last December was named the world’s largest unicorn with a valuation of $353bn – up from $80bn a year earlier – with the markets hopeful of a blockbuster initial public offering in the future. ByteDance saw its total revenues, including its Chinese operation and substantial in-app and ecommerce business, grow by 70% last year to about $58bn, up from $34.3bn in 2020.
While Meta remains a much larger business and revenues rose 37% last year, to $118bn, Zuckerberg has felt the need to launch a commercial counterattack to shore up and diversify his advertising-based business model.
Always quick to ape the successful innovations of rivals, Meta is exploring launching virtual coins, nicknamed “Zuck bucks” by staff, for users of Facebook and Instagram to buy and use, in a very similar strategy to that already employed highly successfully by TikTok.
Earlier this week it emerged that TikTok is now the most lucrative app in the world for in-app purchases. TikTok users spent $840m on its virtual “coins” currency, which can be used to “tip” creators and promote videos, in the first quarter – up 40% year on year.
“It’s the biggest quarter for any app or game ever,” says Lexi Sydow, head of insights at data.ai, which published the report. “It’s the first app ever to beat a game in consumer spend in a given quarter.”
Zuckerberg’s revenue diversification plans follow an ill-fated launch of direct TikTok copycat Lasso in 2018, which shut after just 18 months. Meta is persevering with rival short-form video product Reels, which launched on Instagram in 2020 and Facebook last year, but despite its efforts TikTok’s momentum shows no signs of slowing down.
“Some young people have switched off Facebook entirely,” says Jamie MacEwan, senior media analyst at Enders. “In the UK, 18-to-24s spend as much on TikTok as Facebook, Instagram and WhatsApp combined. There is rampant competition for time. TikTok is the one growing fastest right now, and has scale, it’s the one to watch.”

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