Why Meta And Alphabet Should Dance On TikTok’s Grave

Why Meta And Alphabet Should Dance On TikTok’s Grave



The United States has a TikTok problem, and it is about to get a lot worse.Executives at Snap SNAP +0.9% Inc. (SNAP) announced on Thursday that sales and profits came-in below plan as the social media company faced competition for advertisement spending. Shares lost 39%.Investors are focused on financial metrics. That view is too small.To get more news about chinese letters alphabet, you can visit shine news official website.

TikTok is short form video platform owned by ByteDance, a Chinese conglomerate. Executives in China claim the businesses operate independently. They say data for TikTok’s American members is stored in Singapore and the United States, not China. Until a month ago there was no direct evidence any personal information was ever been accessed by employees based in China.Leaked audio recordings from 80 internal meetings reveal that Bytedance employees repeatedly accessed non-public data from American TikTok users. Data collected from Americans is supposed to be stored on Texas-based servers controlled by Oracle ORCL +1.6% (ORCL), under the Project Texas agreement.

That agreement came out of a 2019 investigation by the Committee on Foreign Investment in the United States. A CFIUS arrangement in 2020 later moved all TikTok data collected from Americans to Texas. The elephant in the room is the soft power of the Chinese Communist Party. The state has absolute authority over all Chinese firms.TikTok is currently the most downloaded, and fastest growing, social media platform in the world, with 1 billions monthly active users. Domestic policy-makers are correct to fear that TikTok is a Trojan horse that might be used by the CCP to influence what Americans see, hear and think.

The Snap financial results released on Thursday were terrible across the board. Executives blamed flat year-over-year sales growth on the challenging economy and changes made to Apple’sAAPL +3.7% mobile operating system, as well as slowing demand for online ads. The real culprit, though is TikTok.

The companies compete for the same coveted 15- to 24-year-old demographic. Unfortunately for Snap stakeholders, TikTok is aggressively ramping up its monetization efforts.TikTok amassed $4 billion in ad sales during 2021, according to a report from eMarketer. Analysts there expect 2022 sales to balloon to $12 billion, more than combined sales of Snap and Twitter (TWTR).

The evolution is about brands making short form video integral to their marketing strategy. TikTok became the logical winner in 2021 as the CFIUS concerns began to fade.

The big opportunity for investors is those concerns are likely to resurface, especially heading into the 2022 mid-term congressional elections.A story at Politico last week linked embedded Chinese spy gear to hundreds of smaller rural American telecom networks. The maker of that equipment is Huawei.

Huawei during 2019 became a telecom equipment powerhouse. Its prowess building network equipment, and high-quality smartphones made its business bigger than Apple. Executives at the Shenzhen, China-based company predicted that it was only a matter of time before its handset business superseded even Samsung. That franchise today is in ruins, wrecked by affiliation to the CCP, and stories like the Politico rural telecom expose.

In my opinion, the stories about the potential dangers of TikTok will come, too. The business is now too important to American culture, and too disruptive to the rest of big tech.Potential winners from taking down TikTok are most of the same companies that are now reeling from lost mindshare and market share.