Assignment II

Case II
The Strategy Behind TikTok’s Global Rise

Submitted By
Pratiksha Thapa
Sec B, MBAe
Trimester VIII

Submitted To
Mr. Sohan Babu Khatri
Ace Institute of Management
29th May, 2021
i. What are the strategies that have been used by TikTok for becoming a borderless
company?

Currently available in 150 countries and 75 languages with one billion downloads, TikTok is a
platform for short-form videos, created with a library of editing tools, filters and effects.
TikTok is the latest social networking app where people (especially Gen Z) thrive to showcase
their talent in just 15 seconds. TikTok users can adapt and remix posts by other users, usually to
mischievous effect, mucking around with context and meaning. The video posts showcase
everything from comedy to lip syncs to dog grooming tips that users create and share on their
phones and this has hooked young audiences around the world. The home-grown content has
become prevalent, particularly among China, India, and other emerging markets where access to
other digital entertainment options has been limited. TikTok has really taken over these market
with smart strategies.

Merged with Musical.ly 
In 2016 ByteDance created the Chinese version of TikTok named Douyin and later in 2017 the
company launched current video sharing platform ‘TikTok’. That same year, a 35-year-old
entrepreneur Zhang Yiming, owner and founder of ByteDance paid an estimated $900 million to
acquire Musical.ly to utilize its foundation and folded the four-year-old Musical.ly into TikTok,
and rebranded it to a single application under the TikTok name in August 2018.
As Musical.ly was already an establish brand with 200 million users worldwide and a large
following in the U.S the merging combined the TikTok’s AI-fed streams and monetization track
record with Musical.ly’s product innovation and grasp of users’ needs and tastes in the West.

Dual version of TikTok

Chinese entrepreneurs like ByteDance founder Zhang Yiming are demonstrating that they can
thrive in a global market rather than just in China, where the Great Firewall regulates the internet
and limits access to several U.S. social media sites. His strategy of having dual versions of TikTok,
one for China's censored internet market and the other for the rest of the world, could be a new
model for other digital content companies aiming for global reach, including China-based digital
start-ups with new ambitions to expand beyond their home market.
AI powered app: Tailored entertaining content
The apps success is driven by a user friendly interface combining creativity and entertainment with
powerful AI to explicitly match users rather than recommend content based on their viewing
preferences. TikTok decides which videos to display to users based on the app's algorithms,
completely controls their feed, and learns their preferences the more they use it. Unlike Facebook,
Netflix, Spotify, and YouTube, TikTok uses AI to send feeds directly to people rather than to
recommend the content.
TikTok uses artificial intelligence (AI) and machine learning to understand and offer exactly what
users desire. The app will keep track of the user's activity and show them videos that they might
enjoy depending on their preferences and likes. Also, the app runs and lists their top campaigns
and challenges that encourage many users to participate along with their favourite creators.

Focused Acquisition and Celebrity Influence 

We all know that the video-making app will face a major legal problem over the music it uses in
its videos. However, the TikTok or Musical.ly apps handled it well by collaborating with major
production companies in the States. Music companies are also taking advantage of the site to
promote their videos. Jimmy Fallon recently became a TikTok lover and, through his own
campaign, achieved the most interaction of more than 10.4 million in the history of TikTok. For
both TikTok and the industry, it's a win-win situation.

Content Network Effect

TikTok provided its users with powerful video editor where with minimal efforts people could
make really good content. In addition to repeating the trending viral challenge, creators can
actually repurpose the other users content. Users will use audio recordings from other posts, to

create a new response to the topic of anyone else. This is the new site to render the regular

person viral sensations. So this leads to snowballing into infinite contents where people can use
other peoples content and make their own by using it.
 TikTok allowed its users for content cross sharing where users can make a video on TikTok,
download or directly share it from the app onto other apps. People who didn’t have the app could
still see your work, and also be intrigued enough to download TikTok and explore it. Thus these
were the strategies used by TikTok for becoming borderless company.

ii. What do you think are the existing challenges that TikTok faces in the global arena?
Express your view with suitable reasoning.

Owned by Chinese company ByteDance, TikTok is widely seen as a serious global competitor for
Facebook. According to SensorTower data, TikTok was the fourth most downloaded non-game app
in the world in 2018, with 663 million downloads, trailing behind Facebook (711 million) and its
related apps WhatsApp and Messenger. In late 2018, Facebook has launched its near-identical video-
sharing service Lasso in territories and it is widely considered knockoff of TikTok. Lasso is a teen-
oriented app that can only be accessed through Facebook or Instagram and is currently only available
in the United States. According to SensorTower, 70,000 U.S. users downloaded Lasso within four
months of its November launch, compared to roughly 40 million users for TikTok in the same time
period. Therefore the Lasso app is yet to gain a foothold as compared to TikTok already established
as a brand.

The rise of TikTok has also resulted in a string of regulatory issues. TikTok was fined $5.7 million by
the US Federal Trade Commission for failing to obtain parental consent before collecting names,
email addresses, and personal information from children under the age of 13. Roughly two months
later, things got even more difficult two months later when it was removed from Google and Apple's
app stores making children vulnerable to pornographic and “cultural degradation” content. After
ByteDance successfully appealed the court verdict, the restriction was lifted two weeks later.

As TikTok rises in global standing, its Chinese background has triggered unease among western
authorities concerned about national security. Furthermore, CEO Mark Zuckerberg’s claims that US
data in Chinese hands represents a security risk. Due to a disagreement with the Chinese government,
former US President Donald Trump had serious plans to ban TikTok in the US but it was postponed
after a Federal judge intervened. In June 2020, the Indian government banned more than 223
Chinese applications within the nation, including TikTok, due to border pressures between the
 two nations. The Pakistani government had also prohibited TikTok on
the basis of immorality and vulgarity, but reversed its decision 10 days afterward.

Also one of the larger concern for TikTok should probably be the trade war with China as it has been
found the U.S. is much more skeptical of Chinese businesses in general. The Chinese version of
TikTok is already a propaganda outlet for the government so it would be more problematic if TikTok
becomes propaganda outlet for China in the U.S. Of course, ByteDance must avoid getting into
trouble with its own government, which has repeatedly chastised it for failing to censor everything
that is required under Chinese law. The app was also accused of moderating away anti-Beijing
content, even outside China. Even though security and political concern mount the growth of
TikTok continues. There's a lot to consider.

Despite challenges, ByteDance is building an empire of apps for a new generation and pushing the
boundaries of traditional digital content. If ByteDance can continue to fulfill its mission of creating a
borderless firm with game-changing technology, it may inspire the formation of new borderless firms
and encourage other developing market tech pioneers to venture out too. Ultimately, this trend will
create a fuller range of digital offerings globally for consumers and businesses.

iii. How do you think should TikTok cope with its potential competitors? Elaborate on the
continuous strategic steps that TikTok should focus on to outperform its competitors?

The competitive advantage of TikTok is to entertain an endless number of prompts and challenges
which make it easy to participate because you don’t have to have anything interesting to talk about in
order to get started. Performance-oriented videos are embedded into TikTok’s DNA, especially after
ByteDance acquired lip-syncing app Musical.ly in November 2017 and absorbed its features into the
TikTok experience. From its beginning, TikTok looked for to differentiate itself from competing apps
through a focus on video altering, permitting indeed youthful amateurs to deliver professional looking
short videos.  

Getting initial recognition and huge numbers are always good, but it somehow puts

a part of pressure on it to sustain popularity and ensure continuing growth. Having a close eye on
users' engagement with the platform, listening in to see what users are searching for, and continually
innovating while holding its fundamental character, should be the priorities for TikTok. As we
are aware that Tiktok, over the years has diverse competition and competitors. So TikTok need to
consider the ways to cope with its potential competitors.

Ensure security and deploy local moderation teams

TikTok has already been questioned for the concern over its data usage. There has been suggestions
that the platform is vulnerable to attacks which enable attackers to retrieve users’ personal
information, including names and birth dates. The young user base also raises another concern around
its moderation policies. Most of TikTok’s moderation of platform content takes place in Beijing with
undisclosed team numbers and structures, which fail to fully understand the nuances of cultural
content in local markets. By deploying local moderation teams that work alongside tandem automated
teams, much like Facebook and Twitter’s moderation infrastructure, it will make it much easier to
control content that is actually harmful. 

Going forward, TikTok needs to become much more transparent with its use and protection of user
data if it wants to continue growth in the West, and work to include appropriate mechanisms and
moderation tools that help to create safe environments for children and teens.

Allowing more private setting

While TikTok has outperformed the competition in terms of app downloads, user retention is
becoming increasingly problematic. Competitors are eager to seize on the recipe for success, as they
are with any disruptive product or platform, and pull users away to their own platforms. TikTok needs
to build a tangible sense of community among its users in order to sustain its market leadership,
allowing the service to grow the relationship between users and the platform.

TikTok's content encourages intimate, confession booth-style interactions in which users share
personal and intimate stories, but it has to allow for this in a more private setting in the future to be
successful. Creating closed-group communities on the platform within the larger ecosystem, for
example, could help meet the changing demands of the younger audiences that have been integral to
its success.
Attention to Quality Content
The app needs to focus on enhancing the quality of content for target audiences. It continuously
need to pay attention by developing and improving it rigorous content evaluation by removing
unqualified content to reduce negative impact on the audience and improve Tik Tok's brand
reputation. As a result, the coordinated effort to review through multiple mediums and audits in
order to minimize the release of harmful content that could sway public opinion would reduce
network pollution and improve TikTok's image.

Both good communication channels and a social network are crucial in the dissemination of
ideas and TikTok has both of these going for it at incredible speeds. Despite the fact that
innovators and early adopters account less of the population, the app's ability to syndicate
both  your own and also discovered content to other valuable real place — such as the Instagram
story feed — means the app's content is being seen by a wider audience. Because TikTok content
is currently made as vertical video, one-touch syndication to Instagram Stories is easy and will
likely help the platform grow organically. Thus TikTok has competive edge over its competitoes
and whether it’s a content creator or more of a social media lurker, you’ll likely be hearing about
TikTok for months and years to come.