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Google Turns to YouTube in a Bid to Stop TikTok

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Google (NASDAQ:GOOGL) has figured out a new way to try to stop TikTok—a Chinese social app that has become a global hit. The company’s new strategy to counter TikTok involves tapping into the popular YouTube platform. According to The Information, Google plans to launch a new YouTube feature called “Shorts.” Through YouTube Shorts, Google will serve brief videos just like TikTok.

TikTok has gained popularity as a platform for sharing and discovering funny video clips. According to Sensor Tower figures, people around the world downloaded the TikTok app more than 730 million times in 2019. As a result, TikTok is the world’s second-most downloaded app behind Facebook’s (NASDAQ:FB) WhatsApp.

TikTok monetizes its audience through advertising. Google and Facebook derive most of their revenue from advertising sales. Therefore, TikTok’s rapid rise poses a huge threat to their lifeline. Both companies have been working hard to stop TikTok.

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Google explored purchasing TikTok rival Firework

Facebook has made several attempts to counter TikTok. The company built a standalone TikTok-like app called “Lasso.” Recently, Facebook explored integrating Lasso into WhatsApp to try to speed up its uptake. Also, the company is testing a new TikTok-like feature called “Reels” that would be part of its Instagram app.

Facebook has also used word of mouth to try to discredit TikTok. Last year, Facebook CEO Mark Zuckerberg suggested that TikTok was helping the Chinese government censor information abroad.

At one time, Google considered buying Firework—TikTok’s US rival. Weibo also expressed interest in Firework, which raised the prospects of a bidding war. In a previous bidding contest for Fitbit (NYSE:FIT), Google had to dramatically raise its offer to fend off the competition.

We don’t know if Google is still pursuing Firework and if Weibo still wants it. However, YouTube Shorts, Google’s new effort to counter TikTok, could launch by the end of the year.

Digital video advertising dollars at stake

As people cut the cord and the traditional television audience shrinks, television advertisers shift their budgets online. As a result, there has been a contest for digital video advertising dollars. The Google-TikTok rivalry is all about competition for video advertising money.

Shares in Google parent Alphabet fell 13% in March, while Facebook stock also fell 13%. The COVID-19 crisis created a headwind for their core advertising businesses.

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