TikTok – Eat my shorts.

YouTube joins the kettle of vultures.

• YouTube, Riposo, Facebook et al show just how easy it is to replicate the TikTok experience in India which should send a shiver down the spine of ByteDance which is running the risk of the same thing happening in the USA.
• YouTube has announced a new service called YouTube Shorts that will imminently launch in India that aims to provide a replacement service for TikTok now that it is banned in India.
• This is in addition to efforts by Facebook, Snap and Riposo to fill the gap left by TikTok following its ban by the Indian government.
• YouTube is already hugely popular in India thanks to the cheap data that has been pioneered by Jio Platforms and Google will make it very easy to go from one to the other.
• The issue that will immediately be raised is the TikTok algorithm which is much better at surfacing videos that users will like than those of its rivals.
• However, in India, this is no longer a factor because TikTok is now absent from the market meaning that the quality of its algorithm is now irrelevant competitively.
• Given that RFM rates Google as the company with the most advanced AI globally, I think that sooner or later it is going to come up with a video recommendation algorithm every bit as good as TikTok’s which will remove its competitive edge.
• This means that to remain globally relevant, TikTok needs to continue to be present in the markets that it intends to serve and that any delay or interruption could spell disaster.
• This is why its deal with Oracle is so risky.
• TikTok and Oracle are presenting a fudged deal where TikTok does not relinquish ownership or grant source code access to Oracle.
• Instead, it seems that Oracle will be the custodian of a locked box ensuring that none of the data processed leaves that box.
• This is easier said than done and I am far from convinced that this will satisfy the concerns of the US Administration (see here).
• Hence, I suspect that TikTok may well end up being blocked or face having to hastily resurrect a deal with Microsoft.
• The net result is an open goal for the kettle of the vultures that are circling in the sky just waiting to feast on TikTok’s user base.
• The real problem for ByteDance is that a deal that is acceptable to the US is unlikely to be acceptable to China and vice versa making a ban of TikTok in the USA more likely.
• India demonstrates that users could quite quickly move over to rival services should TikTok no longer be available which is further exemplified by Google’s launch of YouTube Shorts.
• There is a rising probability that ByteDance, like Huawei, will become a Chinese company that sells Chinese products for Chinese people in China and not much more.