Commentary: Tik Tok, the most valuable Chinese start-up you've never heard of
LAUSANNE, Switzerland: Anticipation has long been building well-nigh the impending takeover of the tech world by Chinese digital giants like Alibaba, Tencent, Baidu and JD.
Efforts so far, withal, take been largely disappointing. The nearly popular messaging app in the West is WhatsApp, non WeChat; people utilize PayPal, not Alipay, for digital payments; Google dominates the search marketplace, non Baidu.
Indeed, Google, Facebook, Instagram, Snap, Spotify, and Amazon, accept barely noticed the competitive touch on of their Chinese equivalents. While China has establish peachy success in global hardware markets, they have had much less success with software. That is, until now.
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You may non have heard of it, but TikTok became i of 2018'due south most downloaded mobile apps for Apple and Android devices in the United states and Europe, unseating the likes of YouTube, Instagram, and Snapchat.
TikTok has already been downloaded more than fourscore one thousand thousand times in the US, logging 4 million downloads from the App Store in Oct alone. It is also one of the virtually popular apps on Google Play.
A DIFFERENT GENRE OF THE VIDEO-SHARING PLATFORM
TikTok is a video sharing platform with a twist. Videos can be no longer than 15 seconds and they are based on various themes: Music, cooking, travel, trip the light fantastic toe, mode, and and then on.
Users create these curt videos, use unproblematic tools to add together music and special furnishings, and share them on the site. The nearly popular clips are high on entertainment value, with a premium on instant gratification.
Similar to Vine, which shut down in 2016, TikTok tin exist thought of as a video version of Instagram or Snapchat.
TikTok comes from China, but, interestingly, it is not owned by i of the Chinese tech giants.
Despite massive investments in video platforms by the likes of Alibaba, Tencent, and Baidu, none of them dominates this expanse.
TikTok – known locally as Douyin – was launched in 2022 by ByteDance, a Beijing-based tech company traditionally focused on news. Its news app, called Toutiao, uses advanced AI algorithms that acquire user preferences, then provides customised news feeds. Bytedance uses the same algorithms to provide relevant video feeds to TikTok users.
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Past the start of 2017, Douyin had become China's most popular mobile video app. In November of the same yr, ByteDance spent US$1 billion to larn a competing video sharing site called Musical.ly.
While Musical.ly was also founded in China, most of its users were based in the U.s.a.. The combined global reach of TikTok and Musical.ly made for a powerful combination.
While many social media applications focus on global consistency and accomplish, TikTok focused on targeting specific local audiences.
For example, in Nihon, TikTok collaborated with a big artist management visitor to bulldoze traffic from YouTube and Instagram using watermarked TikTok videos created by local celebrities. It as well ran a series of dancing and music campaigns focused on overcoming shyness, an event for many young people in Nippon.
Challenges are one of the key elements of TikTok. These are video skits that get acted out on masse, with people creating various responses to a pop meme.
A recent one involved glutinous bears singing an Adele song, which got one.7 meg likes on TikTok, went viral on Twitter and spawned numerous spinoffs.
Competition LOOMS
By the end of 2018, TikTok had more than one-half a billion active users (more than than Twitter) – effectually 40 per cent of them outside Cathay.
It is no surprise that the Chinese giants are closely studying TikTok's successful approach of uncomplicated design, agile promotion, attention to different locales, and focused conquering, with an heart to understanding and emulating the magic formula for succeeding in global markets.
Tencent is already making a bet on the short-video streaming industry by investing in Kuaishou, TikTok'due south main local competitor, and reportedly giving out subsidies worth almost Us$500 million to promote its own platform, Weishi. The giants of the Due west are also taking notation, with Facebook quietly launching a TikTok competitor app called Lasso in November 2018.
Meanwhile, Bytedance recently completed a new round of funding led by major tech investor SoftBank. This valued the company behind TikTok at US$75 billion, making it the world'south most valuable startup, higher even than Uber.
Bytedance cannot residue on its honor, all the same, if it wants TikTok to build on its position equally the first globally successful "fabricated in China" app.
TikTok will need to massively expand from its base, while staving off attacks from well funded and aggressive Chinese and global competitors. Building a successful app is one matter. But, as Snapchat's fall from grace shows, sustaining that success is an entirely more than challenging endeavour.
Michael Wade is professor of Innovation and Strategy at IMD Business School and holds the Cisco Chair in Digital Business organisation Transformation. Jialu Shan is inquiry associate at Global Centre for Digital Business organisation Transformation at IMD Business School. This commentary start appeared on The Chat. Read it here.
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