TikTok: Disrupting Global Social Media amidst Rising Geopolitical Risks and Other Concerns
| Case Code: BENV047
Case Length: 12 Pages
Pub Date: 2023
Teaching Note: Available
| Price: Rs.300
Countries: United States
Themes: International Business, Data Privacy, Digital Marketing,Platform Model
Abstract Case Intro 1 Case Intro 2 Excerpts
The case is about TikTok, a short-format video hosting service owned by Chinese internet technology company ByteDance (ByteDance), and its success story in the global markets. TikTok was launched in 2017 and it soon gained prominence, attracting hundreds of millions of users to its platform. Its success was attributed to its user friendly interface and entertaining content. The app provided users with several tools and filters to make short-format videos of about 15 seconds to 60 seconds. TikTok was hugely successful, becoming the world’s most downloaded app with 850 million downloads in 2020 and more than 3 billion app downloads by the first quarter of 2022. Also, it was the first app not owned by American multinational technology conglomerate Meta Platforms Inc. (Meta), to reach that milestone.
TikTok’s phenomenal growth was attributed to its Artificial Intelligence (AI)-powered algorithms which could determine a user’s area of interest with great accuracy in no time. Most users used TikTok more than TV, podcasts, or other social networking apps. The app was a hit with Gen Z as they used TikTok to watch news and clips of popular television shows such as Game of Thrones.
Under TikTok’s business model, the app monetized through advertising revenues, music distribution, game publishing, and in-app purchases. Marketers also benefited by placing ads seamlessly on TikTok similar to the videos posted by the users. TikTok showed these ads to users after analyzing their consumer behavior and most often, the users, especially if they belonged to Gen Z, purchased the product on the platform.
The app’s growth took both its competitors and the regulators by surprise. TikTok’s popularity was a challenge to big internet technology companies such as Meta, which had held market leadership position for more than a decade with successful apps such as Facebook, Instagram, and Whatsapp. But with TikTok’s huge success came challenges too. There were rising concerns among parents over the app being addictive, with children under the age of 13 using the app. There were also concern in several quarters over toxic videos being uploaded on the app which normalized loneliness, crash dieting, breakups, suicide, and sexually explicit content. In addition to this, TikTok faced challenges related to data privacy, national security concerns, misuse of data, etc. According to the US government, the app stored data about its users and it could share that data with the government of People’s Republic of China (PRC).
Amidst national security concerns, in June 2020, the app was permanently banned in India. To tackle the national security concerns in the US, TikTok started storing its US user data on American multinational computer technology corporation Oracle Corporation’s (Oracle) data servers in the US.
Critics felt that going forward, TikTok would have to allay concerns over its alleged toxic videos, addictive content, misuse of user data, data privacy, and regulatory issues across global markets. How should Shou Zi Chew (Chew), CEO of TikTok and his team tackle these challenges?
The case is structured to achieve the following teaching objectives:
- To understand the strategies adopted by a China-based social media player to foray into global markets.
- To get familiar with generic competitive strategies and the importance of a competitive strategy.
- To illustrate how geopolitical risks affect companies in international business.
- To understand why governments regulate digital companies.
- To explore the ways in which China-based social media companies can navigate the political and regulatory challenges in global markets.
What led to the popularity of tiktok?
The Road Ahead
ByteDance; Zhang Yiming; Global Social Media; For You page; Data privacy; Toxic videos; Inappropriate content; Regulatory issues; Machine learning; Disruption, Monthly Active Users; Meta; Oracle Corporation; The Committee on Foreign Investment; Federal Trade Commission
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