The strategy behind TikTok’s rise

Harvard01 092319

By Rebecca Fannin

In just two years, TikTok has emerged to rival companies like Netflix, YouTube, Snapchat and Facebook, with more than 1 billion downloads in 150 markets worldwide and 75 languages. On the app, homemade videos showcase everything from comedy to lip-syncs to dog-grooming tips that users create and share on their phones. The scrappy, goofy fast-moving content has hooked young audiences around the world.

Chinese entrepreneurs, such as ByteDance Founder Zhang Yiming are showing they can succeed in an openly competitive market internationally rather than only in China. His strategy of dual versions of TikTok—one for China’s Internet-censored market and another for the rest of the world—could be a new model for other digital-content companies aiming for such global reach, including China-based digital start-ups with new ambitions to venture beyond the home market. Their story may also hold lessons for American companies that have watched similar ventures into China meet serious constraints.

In August 2012, Zhang launched his first mobile app, “Toutiao,” or “Today’s Headlines,” an AI-powered daily curated feed of news content personalized to users. In 2016, Zhang introduced a video-sharing app, Douyin, for the Chinese market. He rolled out an overseas equivalent, dubbed TikTok, in 2017. That same year, ByteDance paid an estimated $900 million to acquire, a social-video app based in Shanghai with more than 200 million users worldwide and a large following in the US. The deal combined TikTok’s AI‑fed streams and monetization track record with’s product innovation and grasp of users’ needs and tastes in the West.

After ByteDance folded the four-year-old into TikTok, and rebranded it as a single application under the TikTok name in August 2018, the combined app gained some 30 million new users within three months. The app makes money through ads and from the sale of virtual goods, such as emoji and stickers to fans.

TikTok uses the app’s algorithms to decide which videos to show users, dictates their feed entirely and learns their preferences the more they use it. This is different from the approach of Facebook, Netflix, Spotify and YouTube, which use AI to recommend posts rather than send feeds directly to users.

Facebook faces a serious global rival from China in TikTok. It added 188 million downloads in the first quarter of 2019, surpassing Facebook at 176 million, but trailing WhatsApp at 224 million and Messenger at 209 million.

Rebecca Fannin writes about China’s entrepreneurial boom.



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