Not since the heyday of Vine have we seen a social app become an engine for the production of culture the way TikTok is right now. Barely a year old, TikTok is
having a moment — and to see it, you don’t even have to open the app.
But the more popular the app has gotten, the more likely it has become that regulators would take notice. TikTok is, after all, owned by the Chinese company ByteDance, and is arguably the first mainstream hit consumer app in America to be made in China. And that’s a fraught position to be in, given the ongoing trade war and growing concern about Chinese censorship of American companies.
The Chinese version of TikTok is
already a propaganda outlet for the government. What happens if TikTok becomes a propaganda outlet for China here in the United States? Think Russia’s RT network, but with 1 billion monthly users and an algorithmic feed that it can manipulate however it wants. That seems like something the US government might take an interest in, too.
As of today, the US government has taken an interest, requesting an investigation into the app on national security grounds. Here’s Tony Romm and Drew Harwell
in the Washington Post:
Two senior members of Congress, Senate Minority Leader Charles E. Schumer (D-N.Y.) and Sen. Tom Cotton (R-Ark.), asked U.S. intelligence officials late Wednesday to determine whether the Chinese-owned social-networking app TikTok poses “national security risks.”
In a letter to Joseph Maguire, the director of national intelligence, the lawmakers questioned TikTok’s data-collection practices and whether the app adheres to censorship rules directed by the Chinese government that could limit what U.S. users see. TikTok, which provides users a feed of short videos, has become wildly popular among teenagers worldwide.
“With over 110 million downloads in the U.S. alone, TikTok is a potential counterintelligence threat we cannot ignore,” wrote Schumer and Cotton, who sits on the Senate Intelligence Committee. “Given these concerns, we ask that the Intelligence Community conduct an assessment of the national security risks posed by TikTok and other China-based content platforms operating in the U.S. and brief Congress on these findings.”
TikTok responded forcefully, saying that the company stores data about US users here and in Singapore rather than in China. And it said it would reject any government requests to censor content, including requests from China:
Our data centers are located entirely outside of China, and none of our data is subject to Chinese law. Further, we have a dedicated technical team focused on adhering to robust cybersecurity policies, and data privacy and security practices.
Second, in regards to content concerns. Let us be very clear: TikTok does not remove content based on sensitivities related to China. We have never been asked by the Chinese government to remove any content and we would not do so if asked. Period. Our US moderation team, which is led out of California, reviews content for adherence to our US policies – just like other US companies in our space. We are not influenced by any foreign government, including the Chinese government; TikTok does not operate in China, nor do we have any intention of doing so in the future.
It’s a good statement, written in plain English. And yet somehow I doubt it alone will satisfy regulators.
To test this claim, BuzzFeed News talked to three Tik Tok users in the United States who had recently created content that supported protests in Hong Kong — as well as posting videos of our own that documented the unrest. None of their videos — or ours — were removed.
The most likely explanation for this is simply that pro-Hong Kong content is not a particularly hot topic for TikTok’s mostly-teenage users in the US. … Claims of censorship on TikTok didn’t seem to take into account the fact that American teenagers don’t appear to be creating viral pro-Hong Kong content on platforms like Facebook or Instagram either.
The app amassed an estimated 177 million first-time users across the Apple App Store and Google Play for the third quarter ended September. That represents a 4% decline from a year ago. It’s the first time the hit app saw new installs drop on a quarterly basis, the mobile data provider said.
ByteDance has long splashed huge chunks of money to advertise TikTok on Facebook, essentially buying users away from its biggest rival. But more recently, the company appears to have curtailed that spending. According to Sensor Tower, TikTok was the top app-install advertiser on Facebook in the U.S. for four quarters in a row – until it dropped out of the Top 10 in the second quarter. That coincided with a sharp plunge in new user growth in the country – from the first quarter’s 182% year on year to just 16% in the second quarter.
A final concern for TikTok today: competition. Recently I was talking to a smart person about TikTok who told me that the app had the basic business model of a videogame on Facebook during the heyday of mobile app installs. Developers would determine the lifetime value of a mobile user, then bid less than that amount to acquire them via Facebook. You keep pouring money into Facebook for as long as you can acquire new users for less than you can make from showing them ads. Eventually you run out, the game withers away, and you go make another game and repeat the process.
So far, TikTok has run the same playbook. It knows how much money it can make by showing users ads, and it spends a portion of that money on Facebook, Snapchat, and other platforms to acquire them. But the Bloomberg report above suggests it may be running out of those cheap, early users.
Over the past year, TikTok has had the AI-powered entertainment app market to itself — at least when it comes to apps that have hundreds of millions of dollars to spend on user acquisition. But not any more. Here’s
Geoff Weiss in TubeFilter:
Triller, an AI-powered platform that enables creators to make music videos using licensed songs, has raised $28 million in Series B funding, led by media investment company Proxima (which was founded by veteran businessman and film producer Ryan Kavanaugh, who founded Relativity Media and is behind films like
The Social Network and
Mamma Mia).
New funds will be allocated to fuel growth and for product enhancements according to the company — and presumably for acquisitions. At the same time as it announced the funding round, Triller — which likens itself to a TikTok competitor — said it has acquired U.K.-based
MashTraxx, a machine learning platform for music video editing.
Maybe Triller will be the US-based TikTok clone that outgrows the original. Or maybe it just heralds the arrival of a time when AI-based entertainment apps swell in number to the point where customer acquisition gets so expensive that they’re no longer viable.
TikTok is still ascendant in many ways, and it may yet navigate these issues and whatever comes after them. But the road ahead is getting more challenging all the time.
