TikTok has no doubt become a big headache for Facebook (FB). Last month, CEO Mark Zuckerberg framed TikTok as a threat to free speech. He fell just short of calling the app as China’s information censorship tool.
“While our services, like WhatsApp, are used by protesters and activists everywhere… on TikTok… mentions of these protests are censored, even in the US,” Zuckerberg said in a speech at Georgetown University.
People download TikTok instead of Facebook apps
Why would the social media behemoth worry about TikTok? The Chinese app for sharing playful music videos is growing rapidly. People downloaded the TikTok app over 750 million times in the past year. It beats Facebook at 715 million downloads. Also, it beats Instagram at 450 million downloads over the same period. The social media video app monetizes its audience through advertising. Therefore, its rapidly expanding audience base means it could become a disruptive force in the digital advertising market.
Facebook and Google (GOOGL) currently dominate the digital advertising market, from where they get the vast majority of their revenue. For instance, Facebook got 99% of its revenue from ad sales in the third quarter. Therefore, TikTok could deal Facebook a heavy blow if it eats into Facebook’s share of the ad market. In fact, AdWeek reports TikTok is already hard at work to woo Facebook’s advertisers.
TikTok looks to poach media giants’ ad talent
Also, in addition to threatening Facebook’s advertising business, the video app is poaching Facebook’s talents, ratcheting up the rivalry. The social media giant is now scrambling to counter TikTok. Last year, Facebook launched a rival app called Lasso. Additionally, Facebook is building TikTok-like features into its Instagram app.
Google, whose ad business could also take hit from TikTok’s rise, wants to counter the rival. For example, Google has explored buying Firework as a way to stop TikTok.
If the Chinese video app’s rise is giving Facebook a headache, Facebook may have added to creating the problem. Here are two ways Facebook aided in the rise of TikTok.
Facebook ads helped popularize TikTok
In 2016, Facebook held several rounds of talks to explore buying Musical.ly. However, eventually, the company walked away. A little more than a year after Facebook abandoned Musical.ly, ByteDance bought it and folded it into the TikTok app. Musical.ly added a lot to turning TikTok into a teen sensation.
TikTok’s rapid rise that now threatens Facebook comes on the back of a bold marketing campaign. According to media reports, last year, TikTok spent nearly $1.0 billion to advertise on platforms like Facebook, Instagram, and Snapchat. Instagram is Facebook’s property. It seems TikTok fattened Facebook’s bottom line with ads dollars and used that chance to lure Facebook users. In the end, it seems Facebook empowered a fierce adversary.
Unlike Facebook, Walt Disney (DIS) is too careful to not put ammunition in the hands of its adversary. Disney banned Netflix (NFLX) from advertising on its television networks. Additionally, Disney and Netflix are competitors in the subscription video market.