CHINA - 2020/08/10: In this photo illustration a TikTok logo is seen displayed on a smartphone with ... [+]
The month of August portends an unprecedented challenge for TikTok and its 85 million-strong, rather enthusiastic, user base. Not only will the platform, known for its viral short-form video content, need to find a U.S. buyer to ward off the short-term danger of a U.S. ban, but it will also need to adapt to the long-term challenges of its explosive growth under a new (and possibly divided) leadership. Ultimately, the app should not be looking so much towards prospective buyers, Twitter and Microsoft, in charting a path forward but rather to the lessons from the failure of its would-have-been competitor—Vine.
On August 6th, U.S. President Trump took official action to prohibit transactions between TikTok and U.S. firms if the social media company cannot find a U.S. buyer before September 15th. Formerly known as Musical.ly, TikTok both changed its brand and leadership when it was acquired by Chinese company ByteDance in November of 2017. Since then, the app’s popularity has skyrocketed, drawing in celebrities from other mediums and launching its own social media personalities. The app has even influenced the music industry, with artists now writing new songs that will trend in TikTok dance videos.
However, the Chinese affiliation of TikTok’s parent company and close relationship with the Chinese Communist Party has made controversy, as much as the platform’s popularity, a topic in the news. The company states that it does not share its data with the Chinese government and stores U.S. user data in the U.S. with backups in Singapore, but it faces intense bipartisan and international scrutiny on issues of censorship and data collection and sharing. Citing national security concerns, India banned the app in June followed by the U.S. Congress banning the app on federal devices in July for similar reasons. The demand for TikTok to find a U.S. buyer in 45 days was unexpected, drastic, and legally dubious in some areas, but it is the product of increasing suspicion about the popular application throughout 2019 and 2020.
Yet, TikTok was, to some degree, prepared when this policy was announced. Four days prior, Microsoft stated it might seek to acquire TikTok. On August 8th, the Wall Street Journal reported Twitter was also a prospective buyer. With an estimated value of $50 billion that could balloon to $200 billion in just three years, once sold, TikTok can easily continue its massive growth of the past few years, right?
That may not be the case, and to demonstrate, you have to go back to the first half of the 2010s and another social media app with a short-form video content innovation that made it promising enough to be bought by Twitter. Similar to TikTok, Vine experienced massive growth and hosted a creative community that shaped internet culture at the time, propelling many of its creators into stardom. Its $30 million acquisition by Twitter in 2012 was supposed to be a boon to both the platform and the parent. Nevertheless, after four years, the app was shuttered, and its vibrant community dispersed.
Interviews from former Vine executives with The Verge attribute the failure of the 6-second video app to an excess of competition and a lack of consistency and unity in leadership. Vine’s years with Twitter featured a high degree of executive turnover and acrimony between Twitter executives eager to monetize the platform and founders resistant to the idea.
For TikTok in 2020, the geographic limitations of a possible deal with Microsoft or Twitter heighten the risk of discord within leadership after the acquisition. Twitter has indicated that it is exclusively interested in merging with TikTok’s U.S. operations. While Microsoft’s aims are much broader, seeking to acquire TikTok in the U.S., Canada, Australia, and New Zealand, such a deal would still divide the TikTok brand between two companies.
ByteDance’s global operations are already split between sister-app Douyin in China and TikTok everywhere else, but big questions and ideas still flow up a unified chain of command within the Chinese startup. If Microsoft or Twitter carves out parts of ByteDance, this command fragments. Already, the technical cooperation required for such a deal is causing headaches for Microsoft and ByteDance negotiators, according to Reuters. Unfortunately, the necessity of unified leadership for social media companies has only grown since Vine’s death in 2016.
Like almost all social media platforms (Microsoft-owned LinkedIn being the possible exception), TikTok has struggled with content moderation. In addition to addressing the specific accusations that have been leveled against the company’s algorithm for censuring material that is critical of the People’s Republic of China, the company also must contend with the growth of misinformation, hate speech, and white supremacy that have become hallmarks of the social media landscape. Twitter arguably is the better equipped of the two known potential buyers to develop an encompassing community guidelines and enforcement policy. Still, any disagreement between a U.S. buyer and ByteDance on this policy bodes ill for TikTok’s cohesiveness, especially if the two companies plan to maintain an integrated platform globally.
If TikTok fails to maintain its brand, competitors are already prepared to poach its audience and creators. Vine and TikTok share another challenge—Facebook. The social media giant has already launched its second TikTok copycat feature, Reels, on Instagram. According to the Wall Street Journal, it is offering thousands of dollars to top TikTok creators in an effort to convince them to post new content first or exclusively on this Instagram platform.
As of now, with TikTok still in regulatory limbo and Reels still in its early days, most TikTok creators have remained loyal to the platform that boosted them. Some are even looking to YouTube before Instagram Reels as a fallback to TikTok, though this says little of how popular any of these platforms will be in the future. Facebook’s copycat ventures may fail often, but the company has the size and resources to constantly try again, and copycat features on Instagram tend to be more successful. Although Instagram Stories was widely panned in 2016 as a Snapchat copycat, the feature’s popularity has now eclipsed Snapchat’s. In 2013, Instagram’s 15-second videos drawing users and creatives from Vine, hastening the platform’s demise.
The case of Vine in 2016 is not a perfect fit for the challenges that TikTok faces in 2020. When it comes to the platforms’ relationship with creators, for instance, TikTok and Vine could not be more different. While Vine’s top creators revolted and demanded $1.2 million each from the company, TikTok created and has begun dispersing money from its $200 million creator fund set to increase to $1 billion three years from now. Yet, the areas where these platforms converge—short video apps with enthusiastic younger user bases, cutthroat competitors, and possibly discordant leadership—highlight a few of the challenges beyond a U.S. buyer TikTok will have to overcome to stay alive.
