What TikTok’s Rise Could Mean for Facebook

TikTok parent raised $3.0 billion to fight Facebook

ByteDance, which owns video clip sharing app TikTok, raised $3.0 billion last year in additional funding from a group of investors including SoftBank (SFTBF), according to Bloomberg. The funding could help ByteDance compete with rivals such as Facebook (FB). SensorTower has reported that ByteDance’s TikTok has reached a milestone of 1.0 billion app downloads outside China.

TikTok is seeing a lot of US adoption, with total downloads in the country estimated to have exceeded 96 million at the end of January, as reported by SensorTower. This adoption signals TikTok’s rise in the Western social media market, which Facebook, Twitter (TWTR), and Snap’s (SNAP) Snapchat have long dominated. Facebook ended last year with 1.5 billion daily users worldwide and 286 million in the United States and Canada. Twitter and Snapchat closed the year with 126 million and 186 million daily users, respectively.

What TikTok’s Rise Could Mean for Facebook

Facebook’s border wall against TikTok

ByteDance monetizes TikTok through advertising. While there may be a cause for concern for Facebook investors given TikTok’s rapid rise and its interest in advertising, Facebook doesn’t look defenseless. Last year, Facebook quietly launched its TikTok competitor, Lasso, which has so far received a lot of positive reviews on Google’s app store. With Lasso, Facebook appears to be prepared for the TikTok onslaught.

In China, ByteDance’s rapid rise may pose a digital advertising threat to Baidu (BIDU). “The Google of China,” Baidu draws ~80% of its revenue from advertising.