Should TikTok be banned, or cheated?

TikTok, the short video social network, is already expected to exceed 11 billion euros in revenue by 2022 and is expected to double by 2024. It is even commented that the numbers may be higher, but that the company, which is not listed on the stock exchange, lowers them to give no idea of its size and growth in order to keep a low profile. If before Snapchat was the (copied) “innovation lab” of Meta (formerly Facebook), now TikTok is the new crown jewel. At the same time, Meta reported the first quarter with reduced sales, and Snapchat more than 40% and the layoff of 20% of employees.

Two weeks ago, I was at the Code conference, one of the main ones in the technology sector, in Los Angeles. Among the few guests were Tim Cook (CEO of Apple), Bob Eisner (mythical former CEO of Disney), Evan Spiegel (founder of Snapchat), Sundar Pichai (CEO Alphabet/Google) and several others of the same caliber. Some of the questions were very not very interesting, from those who have a lot of media training to avoid delicate issues, but two themes were predominant: sustainability and the TikTok ban.

Why ban TikTok? The main arguments are: the Chinese government has a stake in ByteDance, the company that owns TikTok, which could lead to excessive reporting of other countries and their populations, creating tools with the potential for manipulation (like the case of Facebook and the US elections). The former US president had already raised this issue, trying to get Oracle or Microsoft to buy part of the company, but had no results. On the other hand, the impact on users, many younger, both in terms of time of use as well as impact on mental health.

What is the secret of TikTok? Data, technology, and investment. It’s basically cocaine, highly addictive. Each 15-second video has information about the user that makes the algorithm to learn and know people better than they know themselves. It can quickly identify that someone likes to watch videos of finger snapping and will start including them more in the feed. The user may think it’s strange, but they actually enjoy it and stay attached to the screen. This technological and data handling advantage was complemented by the ability to invest heavily in long-term growth, even though they were making a loss in the short term.

While some of the arguments may be valid, there is another important reason. TikTok has innovated and is eating a bigger and bigger piece of the advertising cake, and the current companies that dominate the market don’t like this (just as those that were dethroned by them didn’t like it back then either).

This lesson is repeated and fundamental for many organizations that have stopped innovating and investing. E-commerce is an obvious case in point. How many brands have created e-commerce sites and continue with models from five years ago? Zara, for example, is suffering from the entry of Shein, the Chinese real time fashion company, which launches 6,000 fashion products daily on its site and continuously studies users on social networks to understand their behaviors. Zara, which owes its success to innovation at the time through the use of data and technology, now seems to be falling behind in this race.

As in most stories there are no saints or sinners here. There are companies, each with its own interests. As a society we have to neutrally understand what happens and regulate the various players as best we can. But at the same time, companies must remember that without innovation, they die. And that the fact that we are already in a crisis will not stop evolution.

David Bernardo
David Bernardo
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