The Economist - USA (2020-07-25)

TheEconomistJuly 25th 2020 47

1

I

n may bytedance, the world’s most valu-

able startup, leapt further ahead of other

technology “unicorns”. It was valued at

$140bn on the secondary market, up by

nearly half from a funding round in the

spring. The reason? TikTok, a short-video

app that has been downloaded 2bn times.

The “last sunny corner” of the internet, as it

is known thanks to jolly user-generated

content, is China’s first worldwide internet

sensation. For ByteDance’s 37-year-old

founder, Zhang Yiming, it is part of an am-

bition to build a global software giant.

Now that ambition is in jeopardy. On

June 29th India banned TikTok and 58 other

Chinese apps, after deadly clashes between

Indian and Chinese soldiers in the Himala-

yas. The same month ByteDance’s Ameri-

can lawyers told it that President Donald

Trump’s administration has concerns over

TikTok’s Chinese ownership. America is

now threatening to ban the app altogether.

Official unease about TikTok has risen

with its popularity. It has an estimated 70m

American users, in the same league as

Snapchat. In the first quarter it was down-

loaded 315m times globally, more than any

app ever in three months, according to Sen-

sor Tower, a research firm (see chart 1). In

America and Britain it rivals YouTube for

user attention—and not just among teen-

agers, who first took to it. “TikTok is a place

for everyone now,” says Vanessa Pappas,

the app’s general manager for America.

ByteDance keeps its numbers close to

its chest but its investors say it is on track to

bring in $30bn of revenue in 2020, up from

$15bn-20bn in 2019. Net profit could more

than double, to $7bn. Most of that comes

from its Chinese businesses, Douyin, a ver-

sion of TikTok, and Toutiao, a news app.

TikTok is not yet making money, but Byte-

Dance reckons it may in time eclipse all its

Chinese properties put together, by tap-

ping into America’s vast ad market. It has

been rolling out tools to advertisers. Byte-

Dance’s mainly American venture-capital

backers believe this, plus growth in China,

could lift its valuation to $500bn.

To TikTok’s users the idea of Uncle Sam

cracking down on videos of baby hedge-

hogs is as silly as grandpas learning to

shuffle. Officials have two concerns. The

first is over censorship and propaganda.

TikTok has in the past muted discussion of

subjects sensitive in China, like Tibet, Tia-

nanmen Square or repression in Xinjiang

TikTok

Sixty seconds of fame

As America threatens to ban or seize TikTok, its Chinese parent is scrambling for

a way to hang on to its hit app

Ticking along

Worldwide, m

Source:SensorTower *Excludesthird-partyAndroidstores

1

300

200

100

0

2017 18 2019

TikTok downloads*

Snapchat

YouTube

Telegram

Google Meet

Aarogya Setu

Messenger

Instagram

WhatsApp

Facebook

TikTok

Zoom

0 100 200 300

Top app downloads*, Q2 2020

Business

48 IndianITneedsanupdate

50 Bartleby:Pandemicveterans

51 AmericaInc’sawful earnings

52 Covid-eraM&A

52 VapinginChina

53 Schumpeter: The wannabe Alibaba

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