NOW THAT THE DUST has settled, the money has been counted: and it’s a shocker. Facebook lost about US$250 billion in a single day last week, the biggest one-day drop of any company in the history of listed companies. That’s a quarter of a trillion US dollars.
The main culprit? A Chinese app called TikTok.
The short video sharing app from Bytedance, a Beijing company, recently threatened Google for the hallowed title of “world’s most visited website” – and was named as a key problem by Mark Zuckerberg, the head of Meta, Facebook’s parent company.
TRUMP’S SPY THEORY
Unsurprisingly, some Western reporters are going all out to imply, without evidence, that former US President Donald Trump was correct: TikTok is some sort of wicked Chinese spy operation pretending to be a social media app. And it’s harming Western children!
The Wall Street Journal this week reported in a comically biased text and video report two days ago: “The answer to how this app gets to know you so intimately is a highly secretive algorithm long guarded by Tiktok’s China-based parent company Bytedance.”
It then quotes Texas financier Kyle Bass, who says: “TikTok’s algorithm has influenced the thinking of US youth.” Teen girls are being harmed by it, the article says.
The report wants parents to stop their young people using the app, because it – shock horror! – notices how long you spend watching each video (as does every other video app). “Every second you hesitate or re-watch, the app is tracking you,” the report says. (See caption below.)
The whole thing is very odd. The report carefully omits the fact that all apps use technology to get to know their users (including the Wall St Journal app), and that Kyle Bass has become legendary in financial circles for getting everything about China wrong, year after year.
OVER THE PEAK
TikTok is still far behind Facebook in terms of numbers of users, but the issue is something else: a quarterly fall of one million daily visitors to Facebook suggested to analysts that it may have peaked. In which case the only way forwards is down.
Many users, particularly the younger ones, have abandoned Facebook for TikTok, causing Zuckerberg’s company to add an element called Reels to its own popular mobile app, Instagram. Reels is a carbon copy of TikTok. And it is thriving – particularly in Hong Kong, where users were banned from using the Chinese app by the bosses of its American arm.
FACEBOOK’S OTHER CHALLENGES
Facebook still has a huge audience and dominates many people’s lives, so there are no fears it will disappear in the near future. But its growth may have stalled, presaging a different dominant set of voices in the future. As well as the Tiktok challenge, there are at least two additional issues, too.
First, the company has poured money into virtual reality, a field that has lost cash every year for more than two decades. Zuckerberg believes that he is the one who can change that grim record of failure.
He may be right, given the huge amounts of time, investment and creativity being poured into the field – but if he is, analysts are still waiting for the evidence.
Second, Apple made a switch in the way its phones worked, so that people using Meta apps could not have their preferences tracked. This was a good thing for people who strongly value their privacy—but a bad thing for people selling Facebook as an advertising option.
Without tracking of preferences, advertising becomes a blunt and expensive tool. Some advertisers are looking elsewhere.
Trump made huge efforts to snatch ownership as punishment for having committed today’s hottest (and least-acknowledged) crime: being successful while Chinese.
And where will TikTok go? Despite astonishing efforts to hurt it, it is someone still sailing upwards. It has done this despite efforts while fighting off numerous copycats (such as America’s Triller, and China’s Kuaishou), and battling the nastiest types of raw authoritarianism – Trump made huge efforts to snatch ownership as punishment for having committed today’s hottest (and least-acknowledged) crime: being successful while Chinese.
LOOKING PAST HIT-JOBS
And there’s no doubt that hit-jobs like the one from the Wall Street Journal this week will continue. They may not do much harm. WSJ readers are financially astute enough to look past the politics, and TikTok users would run a mile from reading “grand-dad’s newspaper”.
Indeed, Kyle Bass’s spectacular failures show what happens if you follow the politicized news instead of doing your own research and going with the facts on the ground.
Click here to read How Hong Kong people can get back on TikTok