TikTok’s Secret To Explosive Growth ‘Billions And Billions Of Dollars’

American social media companies are increasingly feeling the squeeze from TikTok, the fastest growing video platform on the planet, owned by Beijing-based ByteDance.“It just feels like they are kicking the shit out of everybody,” Scott Galloway, co-host of the Pivot podcast and a marketing professor at NYU Stern, told Snap CEO Evan Spiegel at the Code Conference in Los Angeles on Wednesday. TikTok has been aggressively pulling younger users away from Meta and is now more popular among teens than Instagram and Snapchat, according to August data from the Pew Research Center. (The pandemic also helped TikTok land with older audiences in the U. S. that it had previously struggled to reach.) These American players cannot operate in China, yet they’re ceding ground to a Chinese company on their own turf — as Code host and journalist Kara Swisher put it, TikTok is “eating their lunch.”At this year’s Code Conference, some of the world’s top tech and media CEOs, and prominent political voices, raised concerns about the power, rapid growth and surveillance capabilities of the Chinese-owned platform, in some cases calling for it to be banned altogether. TikTok was notably one of the only major, mainstream social media companies not present."The reason why this has been so challenging for companies to respond to in the United States, but also around the world, is the scale of TikTok's investment," said Spiegel of Snap, which recently laid off some 20% of its own workforce."What nobody had anticipated in the United States was the level of investment that ByteDance made into the U. S. market, and of course in Europe, because it was just something that was unimaginable — no startup could afford to invest billions and billions and billions of dollars in user acquisition like that around the world,” Spiegel said Wednesday night. “It was a totally different strategy than any technology company had expected before because it wasn't an innovation-led strategy; it was really about subsidizing large-scale user acquisition.”That large user base is what has enabled TikTok’s recommendation algorithm to become so strong, Spiegel added. "TikTok got this great lead early on by really aggressively expanding, spending a huge amount of money to do that, so that people can train the algorithm and ultimately end up with a much more personalized feed that's harder to get on a new service,” he explained. Spiegel said Snap will compete with TikTok by continuing to focus on connections with family and friends, rather than strangers — an approach that he said has been core to Snap’s success. (TikTok opens to the “For You” page, which shows videos from users you may not follow that have been recommended by the app’s algorithm.)Google CEO Sundar Pichai also pointed to TikTok as one of his company’s newest, biggest rivals — particularly with regards to YouTube.


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