Why doesn't TikTok simply withdraw from the US?

 


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Why did TikTok die?


The twists and turns, confusing and confusing, can't be more appropriate to describe TikTok's fate. According to the World Wide Web citing news from The Wall Street Journal, just after ByteDance agreed to divest TikTok's U.S. business on the evening of August 1, due to Trump’s explicit repressive statement, Microsoft has suspended its agreement with ByteDance on the acquisition of TikTok’s U.S. business. negotiation. There is no doubt that whether it is "blocked" or acquired, it is a sad ending for TikTok, one of China's most successful overseas applications. Other than that, is there no better choice? On the Internet, people ask from time to time, why doesn't TikTok simply withdraw from the US market? Some critics say that TikTok is not guilty and guilty, because its strong rise in the US market has impacted its status as "America No. 1" and has moved the cheese of some Silicon Valley giants. It will be targeted. If you take the initiative Quitting will be in the arms of others. However, for any mature company, business considerations will be an important factor in every decision made.


In 2017, in order to enter the U.S. market, TikTok's parent company Bytedance has spent US$1 billion to acquire competitors from the beginning. In the following years, the investment in marketing and advertising is also an astronomical figure. In the business world, if there is an investment, there is a return. If TikTok voluntarily withdraws from the US market, its early investment will undoubtedly be a waste of money. Previously, there were media reports that a US investment agency wanted to initiate the acquisition of TikTok and offered a $50 billion offer, which is 50 times its estimated revenue of $1 billion in 2020. Of course, TikTok's development prospects in overseas markets are huge. No matter what method is used to evaluate its market value, it will be underestimated. But when it sits at a negotiating table where it is destined to have no right to speak, how to raise its own value is probably the first thing to consider.


What's more, the list of shareholders in Bytedance, such as Sequoia Capital and General Atlantic, are all from the United States, and they will not abandon their home market with huge development prospects. According to a report by market research agency eMarketer, TikTok's user scale in the US market increased by 97.5% in 2019. The number of US users in 2020 is expected to reach 45.4 million, and in 2021, this number will exceed 50 million. Another data pointed out that in January 2020, Douyin and TikTok's revenue totaled 28.6 million US dollars, of which the US market accounted for 10.1%, second only to China.


In fact, in addition to commercial considerations, the moral level is also the reason why TikTok chose to "do it hard" in the United States. Previously, Vanessa Pappas, the general manager of TikTok US, responded to Trump on Twitter that TikTok will operate in the United States for a long time and "will not go anywhere" and plans to create more jobs in the United States. opportunity. Vanessa said that during the COVID-19 pandemic, TikTok provided entertainment and improved connections for millions of Americans. TikTok already has 1,500 employees in the United States and plans to recruit another 10,000 employees in the next three years. At the same time, it will provide a $1 billion fund to support creators who share videos on the platform.


If TikTok withdraws from the United States, the aforementioned employees and millions of creators will lose their source of income, which may bring greater pressure to American society where the unemployment rate is already rising. In addition, it will not only be individuals who lose income, but also many American companies that have signed contracts with TikTok. In May 2019, TikTok and Google signed a three-year agreement, promising to purchase more than $800 million in cloud services from Google during this period. At that time, some media analysis said that this transaction would be a considerable profit for Google Cloud. In July 2020, TikTok also signed a multi-year cooperation agreement with the National Music Publishers Association (NMPA). The latter stated in a statement that NMPA members can choose a licensing framework through the partnership so that they can be included in TikTok. Benefit from the above works.


TikTok's bytes have long been beating on American soil, and it has profoundly affected American lives. Since 2017, hundreds of media have registered TikTok accounts. In 2019, NBC will transfer TikTok from Snapchat and upload four new content on TikTok every week. Using TikTok to browse and share content is gradually becoming a way of life for young Americans. According to statistics, 49% of young Americans are TikTok users. Every American who installs TikTok opens this software on average 8 times a day, with an average duration of 5 minutes, far surpassing Facebook, Instagram, and Snapchat. Traditional social software. As the "New York Times" stated in an article, "TikTok has a real creative culture and is loved by millions of young Americans." Withdrawing from the US market, it will be lost to tens of millions of users. A truly interesting platform for sharing life is also irresponsible.


Overtaking from product design


So, as software that has taken the world by storm, how does ByteDance rely on TikTok to open up overseas markets?


According to Zhang Xiaorong, Dean of Deepin Technology Research Institute, the reason why TikTok is able to achieve today's achievements lies in the driving of the underlying algorithms of its products and "burning money to pave the way." I have to admit that Douyin and TikTok are indeed very successful product applications. According to data from Sensor Tower, as of the end of April 2020, the total global downloads of Douyin and its overseas version have exceeded 2 billion times. According to official data from Bytedance, as of the end of 2019, the number of global monthly active users of Bytedance's products has exceeded 1.5 billion, and its business covers 150 countries and regions in 75 languages. The video on TikTok generally does not exceed 15 seconds, and this physically captures the user's attention before thinking. At the same time, TikTok's algorithm of recommending content according to user preferences, and firmly grasps the user's interest, so that people can be immersed for a long time. "The vibrato is one day, the world has been thousands of years", the ridicule of Chinese netizens just shows the logic behind this.


In the Chinese market, the successful recommendation algorithm and preset embedded shooting function, as well as the "dumb" experience brought by them, have also made TikTok's overseas expansion have a "double the effort" effect. For example, TikTok provides users with easy-to-operate special effects, filters, stickers, and other preset tools. According to the BBC’s previous report, Paul Barnes, the executive director of the third-party application analysis company App Annie, commented on TikTok, “It has formed a successful model that can make user-produced content simple, accessible, and both. Professional video." In Barnes's view, there were some popular short video applications before, but if users do not use devices other than smartphones, high-level professional skills, and outstanding performance talent, it is difficult to produce high-quality and attractive videos. "In contrast, TikTok's editing functions are relatively simple, making it easier to create original videos."


Previously, there were media reports that TikTok users often use TikTok presets to shoot short videos and upload them to social media such as Facebook. This has led to the popularity of videos and pictures with "TikTok" watermarks across the Internet, thus forming The effect of user spontaneous marketing. Harvard Business Review also wrote that TikTok's growth and (in the short term) sustainable competitive advantage comes from its ability to merge and reorganize different types of products and services. On the consumer side, TikTok’s algorithm quickly learns personal preferences by capturing users’ likes, comments, and time spent on each video. On the creator side, AI can simplify video editing and provide popular beautification features such as music, hashtags, filters, and other popular trends. In essence, TikTok has recombined the elements of these different technologies and applications to create a new small and beautiful entertainment for ordinary people, which is very different from the real-life account provided by Facebook.


Review TikTok's operational gains and losses


Like most Chinese companies going overseas, TikTok also selected its first stop in the Southeast Asian market. There are also profound reasons for this choice. First, the local cultural barriers are relatively low, leaving opportunities for outsiders. Secondly, Chinese products represented by mobile phones have successfully taken root in Southeast Asia, and local consumers have a higher acceptance of Chinese brands than in other regions. Finally, local people have a natural desire to express themselves, which provides rich soil for the growth of TikTok. According to statistics, in 2019, India became the fastest growing country for TikTok's business with 277.6 million downloads. When entering the more youthful market in Japan and South Korea, TikTok started by inviting local celebrities and successfully attracted a large number of young users with celebrity effects, which quickly spread across campuses and eventually developed into a phenomenon-level product.


At the same time, in order to better integrate local culture, TikTok often employs a large number of local employees. According to previous reports from Sina Technology, ByteDance's principle for recruiting overseas office employees is that there must be locals, even Chinese employees need to have local life or study abroad experience. For different markets, TikTok has also created different cultural positioning for itself. For example, it mainly promotes dance and funny in Southeast Asia and other surrounding markets, and it mainly promotes two-dimensional and life content in Japan and South Korea, making it popular everywhere.


In a society where "grassroots culture" is still prevailing in the United States, when those high school students who are dressed in casual clothes and can be seen everywhere on the street can taste the overnight boom on TikTok, more young people see themselves in them Shadows and opportunities. Different from the traffic distribution rules of traditional platforms that are centralized and tend to be big V, in the face of TikTok's algorithm and personal dedicated traffic pool, it seems that "borns are equal".


In addition, the "New York Times" has published a series of articles analyzing the reasons for TikTok's success. These articles pointed out that, compared to traditional social media platforms such as Facebook and Twitter, TikTok has no ads, no news, no Internet sprayers, and bullies, and is "maybe the only truly pleasing social network in existence." On the American version of "Zhihu" Quora, some netizens attribute TikTok's success to its creation of a "collective madness" security atmosphere. Those who are embarrassed to show the "stupid" side of social networking sites can be released here. , Because everyone is making a fool of themselves, no one feels embarrassed. However, in the process of business promotion, the low retention rate has been plagued by TikTok, which is doomed to its continuous investment in capital.


In November 2017, ByteDance invested US$1 billion to complete the acquisition of Musical.ly, an overseas music short video platform. The latter was established in 2014 and was developed by a Chinese team, focusing on overseas markets such as the United States. At that time, it had accumulated 200 million users. After the acquisition was completed, ByteDance transferred the users of Musical.ly to TikTok, thereby gaining a first-mover advantage in traffic. A few months later, TikTok's installed capacity surpassed Facebook in one fell swoop, ranking first in the US market.


According to The Information previously quoted sources familiar with the matter, in 2018, Bytedance invested heavily in TikTok's overseas expansion, resulting in a loss of US$1.2 billion. Among them, Bytedance spent more than $300 million on Google's ads in 2018. TikTok not only advertised twice in the "American Spring Festival Gala" Super Bowl live broadcast on Fox TV, but it was also promoted on other pure streaming media advertising spaces of Fox. It is reported that Fox has a 30-second advertising time on streaming media. The asking price is US$300,000-400,000. In July 2020, according to the British media "The Sunday Mail", citing people familiar with the matter, TikTok had previously planned to invest 3 billion pounds to establish a global headquarters in London, England. Although this plan was ultimately broken, its investment in capital scale It's also obvious.


At the same time, in order to maximize the retention of content creators, TikTok also showed real money. On July 27, according to Bloomberg News, TikTok established a $200 million fund in the United States, which will be distributed to some American users with a large number of fans to encourage them to continue creating new content. According to a BBC report on July 31, TikTok has also set up a special fund of 70 million pounds in Europe to allow video creators to obtain higher income while more actively engaged in content creation. However, in general, the more important reason for TikTok's success is to firmly grasp users in different markets and cultural backgrounds. For any company, excellent products are undoubtedly the broadest moat.



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