Facebook vs TikTok

How Facebook profited off of Tiktok's growth

Anshil Bhansali, Aug 3, 2020

With the latest antirtrust hearings for the big tech CEOs, it is inevitable that Tiktok's growth in the US will be brought up as a competitive threat to big tech. Facebook will claim that it does not have monopolistic powers, and clearly faces strong competition from companies like Tiktok. But the truth is, Facebook has profited billions of dollars off of TIktok's growth.

Tiktok's growth started from the November 2017 acquisition by Musical.ly app by ByteDance. In order to grow, it settled on its only reliable strategy; Online advertising, an industry dominated by the famous duopoly, Facebook and Google.

Armed with cash from ByteDance, Tiktok undertook an advertising campaign that cost over 1 billion dollars in 2018 according to WSJ . That included over 300 million spent just on google ads. Tiktok spent on numerous platforms, but the majority of money was spent on Facebook ads.

Reuters reported that 'nearly 22% of all ads seen by U.S. Apple device users on Facebook ad network came from TikTok and its Chinese counterpart Douyin' while Bloomberg noted in 2019 '13 percent of all the ads seen by users of Facebook’s Android app were for TikTok.'

This also brings up an interesting question, is it even possible to develop and grow a mobile app organically today? or is advertising spend needed to grow? Now, it is clear that Tiktok only grew in the US because Facebook allowed it to, and made hundreds of millions of dollars off it in the process.

As Tiktok's user base has grown exponentially, its competitive threat to Facebook grew. And similar to how Facebook decided Snapchat's fate by copying the user stories feature in 2016, Facebook announced Instagram Reels, which is essentially a copy of tiktok, will Facebook destroy Tiktok? Recently, it was reported that Facebook is paying Tiktok creators to leave Tiktok and create content on Reels exclusively.

Will this be Facebook crushing Tiktok similar to how it did Snapchat, or will this be a failed attempt at imitating another product, like of how facebook launched IGTV to take on Youtube.