by tyler | Apr 4, 2024 | Tech
As U.S. lawmakers weigh a possible TikTok ban, the ByteDance-owned short-form video app released an economic impact report on Thursday. In it, the company touts the platform generated $14.7 billion for small- to mid-size businesses (SMBs) last year, and a further $24.2 billion in total economic activity, supported through small business’s use of TikTok.
In addition, it says that over 7 million U.S. businesses rely on TikTok and that 224,000 jobs were supported by small business activity on the platform in 2023. Of those, 98,000 jobs were supported directly within SMBs on TikTok. The states with the largest impacts included California, Texas, Florida, New York and Illinois.
The study was performed by the economics forecasting group, Oxford Economics. It measured SMB activity on TikTok, along with ad spend and ROI, and leveraged census data and other measurements to come to its conclusions.
While a report of this size and scope couldn’t be thrown together overnight, the timing of its release is likely not coincidental.
In March, a bill that could ban TikTok passed in the House of Representatives. President Biden said he would sign it into law if it also passes in the Senate. Of concern to TikTok, is that the bill gained bipartisan support, passing the House with a 362-65 vote, despite former President Trump’s change of position on the matter. The Trump administration had previously sought to ban TikTok, calling it a national security risk, but Trump now opposes a ban , saying that Meta would benefit.
Meta is clearly preparing for a possible future where TikTok could be banned, if not spun out from ByteDance. On Wednesday, Facebook was updated to support a new video player across its social network ; it will recommend Reels, long-form and Live videos, but default to showing them in vertical format, as on TikTok.
YouTube and other short-form video platforms could also gain increased exposure if TikTok were to be banned, and could pave the way for startups competing in the space, as well.
TikTok’s economic report is a clear attempt to make a case for why the app should be allowed to continue to operate, noting that $5.3 billion in tax revenue last year was supported by small business activity on TikTok, including as a marketing and advertising platform.
The company also presented a variety of case studies where business owners claim that TikTok helped to drive sales, website traffic, and other forms of additional revenue.
Tying the ban to the app’s economic impact is a solid PR strategy — especially since a group of TikTok creators got a judge to successfully block Trump’s TikTok ban in 2020 by saying it would affect their professional opportunities, like brand sponsorships, and ability to make an income.
Though TikTok has been urging users via in-app messages to call Congress to protest a ban , the bill still faces a more difficult path to pass in the Senate — and more so now that the Republican party’s leader has reversed his position on the ban.
The controversial bill that could ban TikTok faces a rocky road in the Senate
by tyler | Apr 2, 2024 | Tech
As TikTok continues to face increased pressure in the U.S. and the U.K. , the company is signaling its commitment to fostering educational content on its app. The company announced on Tuesday that it’s expanding its dedicated STEM feed across Europe, starting in the U.K. and Ireland, after first launching it in the U.S. last year .
The STEM feed will begin to automatically appear alongside the “For You” and “Following” feeds for users under the age of 18. Users above the age of 18 can enable the STEM feed via the app’s “content preferences” settings. The feed includes English-speaking content with auto-translate subtitles.
TikTok says that since launching the feed in the U.S. last year, 33% of users have the STEM feed enabled and a third of teens go to the STEM feed every week. The app has seen a 24% growth in STEM-related content in the U.S. since the feed launched. Over the past three years, almost 15 million STEM-related videos have been published on the app globally.
The company is expanding its partnerships with Common Sense Networks and Poynter to assess all of the content appearing on the STEM feed. Common Sense Networks will examine the content to ensure it’s appropriate for the STEM feed, while Poynter will assess the reliability of the information. Content that doesn’t pass both of these checkpoints will not be eligible for the STEM feed.
The launch of the STEM feed comes as TikTok has been criticized for showing harmful content to kids and teens, with rights groups alleging that the app uses addictive design practices to keep users engaged for as long as possible.
In February, the European Union said it was investigating whether TikTok has breached the Digital Services Act, which includes rules for keeping users safe online. The commission is investigating whether the app is doing enough to stop minors from finding inappropriate content and determining whether its design choices stimulate addictive behavior.
With today’s announcement, TikTok is seeking to further present itself as an educational hub for the millions of young users on its app as a way to counter criticisms from lawmakers around the world. The company has already used the STEM feed to counter claims that it’s harmful for young users, as TikTok CEO Shou Chew touted the feed while testifying in two separate U.S. congressional hearings, one in March 2023 and one in January 2024.
TikTok ban: How Congress could force ByteDance to sell or push the app out of the US
by tyler | Apr 1, 2024 | Tech
In March, the U.S. House of Representatives overwhelmingly passed a bill that could force ByteDance to divest TikTok or face a ban in U.S. app stores. Much of the related discussion and debate has centered around American data security and speech rights , but a potential move also highlights something else: TikTok is growing its focus on e-commerce, but the interplay of tech giants and geopolitics is squeezing smaller merchants.
Over the past few months, merchants — many of them from China — looking for an Amazon alternative have flocked to TikTok to peddle clothes, cosmetics, electronics and a variety of other products to U.S. buyers, by way of TikTok Shop. In interviews with TechCrunch, sellers from Shenzhen — the Chinese megacity that’s a major hub for Amazon merchants — said they felt a collective sense of frustration over rising geopolitical tensions and “helplessness” about a potential TikTok ban.
“The situation is not within our control,” a retailer specializing in maternity and baby products told TechCrunch. “It’s just difficult to know how things will develop.” With existing supply chains hard to shift, “we just have to play it by ear.” (The sellers asked not to be named due to political sensitivities.)
TikTok Shop officially launched in September 2023 with 200,000 merchants already on board. But since then it has not provided any updated numbers on how many merchants are currently on the platform, nor how much they sell there, nor how many sell elsewhere (and where else that might be).
Research from Jungle Scout, an Amazon data intelligence provider, gives some idea of TikTok’s e-commerce impact, however. It found that 20% of Amazon sellers, brands, and businesses have plans to expand to TikTok Shop this year. Before the current political backlash took off, ByteDance reportedly projected that it had the potential to grow its U.S. e-commerce business tenfold to $17.5 billion this year.
TikTok isn’t the only platform on the list for merchants looking for more channels beyond Amazon to expand their customer bases. Its rise is part of a bigger shift we’ve been seeing around alternative marketplaces like Temu commanding more attention not just from shoppers, but also from Chinese e-commerce exporters and merchants. And Amazon is reportedly taking notice , another sign that alternatives are picking up traction.
TikTok did not immediately reply to a request for comment.
TikTok has been trying to boost its e-commerce business since the U.S. launch last September.
The app is famous — or infamous, depending on who you talk to — for how it tightly controls what content is surfaced for whom. TikTok Shop also has a strong dose of curation to it.
Unlike Temu , known for its seas of cheap, white-labeled products from Chinese factories sold directly to U.S. consumers, TikTok’s strategy has been to onboard and highlight more branded goods, making it more of a direct competitor to Amazon.
TikTok is also looking to attract sellers with more traditional subsidies. According to reports, to encourage merchants to sell goods at a steep discount during the most recent Black Friday sales period, TikTok doled out subsidies to those merchants to mark down their prices by as much as 50% .
Incentives and algorithms aside, merchants have been interested in selling on the app simply because TikTok’s short video platform generates massive engagement. According to a survey from Tabcut , a Chinese firm that tracks TikTok Shop performance, nearly 70% of sellers reported an increase in sales year-over-year for the first 11 months of 2023.
This is also borne out by consumer behavior, where products endorsed by influencers continue to gain ground, especially with coveted younger consumers.
According to Jungle Scout, nearly 20% of consumers began their search for products on TikTok in the first quarter of 2023, up 44% from a year ago. While 56% of all consumers still preferred to start their product search on Amazon, 40% of the Gen Z demographic preferred TikTok for search instead of Google.
The heavy concentration of young shoppers is unsurprising, given 52% of TikTok’s U.S. users are aged 18 to 34, according to Pew Research . TikTok has the opportunity to reshape how America’s younger generations shop online.
Outside of leaning on its dynamics, TikTok has been doing some pretty bald media spinning to push its message.
Earlier this month, the commercial research firm Oxford Economics published a report on the impact of TikTok on the small to medium-sized business (SMB) sector in the U.S. It was funded by TikTok, and perhaps unsurprisingly, it provided a ringing endorsement of TikTok’s economic impact: It estimated that a presence on the platform (through advertising or just marketing themselves via accounts) led to $14.7 billion in revenue for the 7 million SMBs in the U.S. using it.
TikTok seems to be serious about making inroads into e-commerce, but it’s still in flux. On one hand, the company — even as it faces a potential U.S. ban or forced sale — continues to roll out new e-commerce features, such as a new video shopping format it previewed at a conference this month. On the other, it’s modifying or enforcing seller policies seemingly on the fly as it tries to navigate how to grow under a particularly glaring spotlight.
“TikTok [Shop]’s internal management is a bit chaotic right now. It’s a new platform, so it hasn’t started squeezing sellers, but its policies are still changing,” said a merchant selling lamps, who has been selling on Amazon since the mid-2010s.
One of those policies appears to be related to what its algorithms are surfacing to which consumers. Merchants out of China say that in recent months, TikTok Shop in the U.S. has ramped up efforts to prioritize U.S.-based shops over foreign ones. Sellers tell TechCrunch that it’s led to the rise of black market “agents” — parties that broker deals between foreign sellers and American residents, who in turn set up TikTok Shops that appear U.S.-owned but are really run by the foreign merchants.
Merchants are willing to jump through these hoops to grow their touch points with users, and diversifying their channels as one giant emerges after another.
“Margins on Amazon are getting thinner and competition is increasingly fierce because of Temu, so TikTok gives us another option,” said the lamp seller.
To gauge TikTok’s impact on Amazon, “we need to understand the overall retail market in the U.S.,” said Richard Xu, partner at Starting Gate Fund, who invests in cross-border retail solutions between China and the U.S.
E-commerce comprises around 15% of U.S. retail, according to the Department of Commerce, so “if we talk about the small share of the online e-commerce sector alone, there isn’t much to discuss,” suggested Xu.
But if TikTok Shop’s strategy is mainly focused on bringing offline businesses online for the first time, that could be a very big move. “[Using] live streaming e-commerce to allow offline small shops and stores to participate, the potential is quite significant.”
In any case, while 15% sounds small, the number is still substantial — $285.2 billion — so TikTok Shop’s potential is enormous even if it just gets a small slice of the existing e-commerce cake.
Juozas Kaziukenas, founder of e-commerce intelligence firm Marketplace Pulse, doubts TikTok will ever replace Amazon. “It doesn’t have the broad selection and fulfillment, and shoppers in the West are used to search-based e-commerce,” he said. “But many people spend many hours using TikTok every day, thus, sometimes they will buy things on it.”
“In the U.S. and other countries in the West, shopping apps developed in parallel with apps that provide entertainment or connection like social media. We got used to getting different things from different apps, as opposed to going to one place for it all,” he added.
“Today, social apps like TikTok are trying to figure out shopping before retailers like Amazon figure out social (like through Amazon Inspire). But the status quo of different apps serving different needs remains.”
TikTok Shop officially launches in the US
by tyler | Apr 1, 2024 | Tech
In March, the U.S. House of Representatives overwhelmingly passed a bill that could force ByteDance to divest TikTok or face a ban in U.S. app stores. M uch of the related discussion and debate has centered around American data security and speech rights , but a potential move also highlights something else: TikTok is growing its focus on e-commerce, but the interplay of tech giants and geopolitics is squeezing smaller merchants.
Over the past few months, merchants — many of them from China — looking for an Amazon alternative have flocked to TikTok to peddle clothes, cosmetics, electronics and a variety of other products to U.S. buyers, by way of TikTok Shop. In interviews with TechCrunch, sellers from Shenzhen — the Chinese megacity that’s a major hub for Amazon merchants — said they felt a collective sense of frustration over rising geopolitical tensions and “helplessness” about a potential TikTok ban.
“The situation is not within our control,” a retailer specializing in maternity and baby products told TechCrunch. “It’s just difficult to know how things will develop.” With existing supply chains hard to shift, “we just have to play it by ear.” (The sellers asked not to be named due to political sensitivities.)
TikTok Shop officially launched in September 2023 with 200,000 merchants already on board. But since then it has not provided any updated numbers on how many merchants are currently on the platform, nor how much they sell there, nor how many sell elsewhere (and where else that might be).
Research from Jungle Scout, an Amazon data intelligence provider, provides some idea of TikTok’s e-commerce impact, however. It found that 20% of Amazon sellers, brands, and businesses have plans to expand to TikTok Shop this year. Before the current political backlash took off, ByteDance reportedly projected that it had the potential to grow its U.S. e-commerce business tenfold to $17.5 billion this year.
TikTok isn’t the only platform on the list for merchants looking for more channels beyond Amazon to expand their customer bases. Its rise is part of a bigger shift we’ve been seeing around alternative marketplaces like Temu commanding more attention not just from shoppers, but from a Chinese e-commerce exporters and merchants. And Amazon is reportedly taking notice , another sign that alternatives are picking up traction.
TikTok did not immediately reply to a request for comment.
TikTok has been trying to boost its e-commerce business since the U.S. launch las September.
The app is famous — or infamous, depending on who you talk to — for how it tightly controls what content is surfaced for whom. TikTok Shop also has a strong dose of curation to it.
Unlike Temu , known for its seas of cheap, white-labeled products from Chinese factories sold directly to U.S. consumers, TikTok’s strategy has been to onboard and highlight more branded goods, making it a more of a direct competitor to Amazon.
TikTok is also looking to attract sellers with more traditional subsidies. According to reports, to encourage merchants to sell goods at a steep discount during the most recent Black Friday sales period, TikTok doled out subsidies to those merchants to mark down their prices by as much as 50% .
Incentives and algorithms aside, merchants have been interested in selling on the app simply because TikTok’s short video platform generates massive engagement. According to a survey from Tabcut , a Chinese firm that tracks TikTok Shop performance, nearly 70% of sellers reported an increase in sales year-over-year for the first 11 months of 2023.
This is also borne out by consumer behavior, where products endorsed by influencers continue to gain ground, especially with coveted younger consumers.
According to Jungle Scout, nearly 20% of consumers began their search for products on TikTok in the first quarter of 2023, up 44% from a year ago. While 56% of all consumers still preferred to start their product search on Amazon, 40% of the Gen Z demographic preferred TikTok for search instead of Google.
The heavy concentration of young shoppers is unsurprising, given 52% of TikTok’s U.S. users are aged 18-34, according to Pew Research . TikTok has the opportunity to reshape how America’s younger generations shop online.
Outside of leaning on its dynamics, TikTok has been doing some pretty bald media spinning to push its message.
Earlier this month, the commercial research firm Oxford Economics published a report on the impact of TikTok on the SMB sector in the U.S. It was funded by TikTok, and perhaps unsurprisingly, it provided a ringing endorsement of TikTok’s economic impact: it estimated that a presence on the platform (through advertising or just marketing themselves via accounts) led to $14.7 billion in revenues for the 7 million SMBs in the U.S. using it.
TikTok seems to be serious about making inroads into e-commerce, but it’s still in flux. On one hand, the company — even as it faces a potential U.S. ban or forced sale — continues to roll out new e-commerce features, such as a new video shopping format it previewed at a conference this month. On the other, it’s modifying or enforcing seller policies seemingly on the fly as it tries to navigate how to grow under a particularly glaring spotlight.
“TikTok [Shop]’s internal management is a bit chaotic right now. It’s a new platform, so it hasn’t started squeezing sellers, but its policies are still changing,” said a merchant selling lamps, who has been selling on Amazon since the mid-2010s.
One of those policies appears to be related to what its algorithms are surfacing to which consumers. Merchants out of China say that in recent months, TikTok Shop in the U.S. has ramped up efforts to prioritize U.S.-based shops over foreign ones. Sellers tell TechCrunch that it’s led to the rise of black market “agents” — parties that broker deals between foreign sellers and American residents, who in turn set up TikTok Shops that appear U.S.-owned but are really run by the foreign merchants.
Merchants are willing to jump through these hoops to grow their touchpoints with users, and diversifying their channels as one giant emerges after another.
“Margins on Amazon are getting thinner and competition is increasingly fierce because of Temu, so TikTok gives us another option,” said the lamp seller.
To gauge TikTok’s impact on Amazon, “we need to understand the overall retail market in the U.S.,” said Richard Xu, partner at Starting Gate Fund, who invests in cross-border retail solutions between China and the U.S.
E-commerce comprises just around 15% of U.S. retail, according to the Department of Commerce, so “ if we talk about the small share of the online e-commerce sector alone, there isn’t much to discuss,” suggested Xu.
But if TikTok Shop’s strategy is mainly focused on bringing offline businesses online for the first time, that could be a very big move. “[Using] live streaming e-commerce to allow offline small shops and stores to participate, the potential is quite significant.”
In any case, while 15% sounds small, the number is still substantial — $285.2 billion — so TikTok Shop’s potential is enormous even if it just gets a small slice of the existing e-commerce cake.
Juozas Kaziukenas, founder of Marketplace Pulse, an e-commerce intelligence firm, doubts TikTok will ever replace Amazon. “It doesn’t have the broad selection and fulfilment, and shoppers in the West are used to search-based e-commerce,” he said. “But many people spend many hours using TikTok every day, thus, sometimes they will buy things on it.”
“In the U.S. and other countries in the West, shopping apps developed in parallel with apps that provide entertainment or connection like social media. We got used to getting different things from different apps, as opposed to going to one place for it all,” he added.
“Today, social apps like TikTok are trying to figure out shopping before retailers like Amazon figure out social (like through Amazon Inspire). But the status quo of different apps serving different needs remains.”
TikTok Shop officially launches in the US
by tyler | Mar 18, 2024 | Tech
Hey, folks, welcome to Week in Review (WiR), TechCrunch’s regular newsletter recapping noteworthy happenings in tech over the past few days.
This week, TechCrunch viewed leaked documents out of SpaceX showing some questionable practices related to employee stock options.
X CEO Elon Musk announced that he would open source Grok, X’s AI-powered chatbot meant to compete with OpenAI’s ChatGPT. Grok — developed by Musk’s AI startup, xAI — was released last year, armed with features such as access to “real-time” information on X and views undeterred by “politically correct” norms.
Elsewhere, Ron interviewed Denise Dresser, the CEO of Slack, on her effort to bring stability to the Salesforce business that’s seen three CEOs in a single year.
Lots else happened. We recap it all in this edition of WiR — but first, a reminder to sign up to receive the WiR newsletter in your inbox every Saturday.
Leaked SpaceX docs: We got our hands on some leaked SpaceX documents that show some unusual terms to stock awards that employees are required to agree to. Among other things, the company gives itself the right to ban past and present employees from participating in tender offers if they are deemed to have committed “an act of dishonesty against the company” or to have violated written company policies.
Phantom, now a phantom: Phantom Auto, a remote driving startup that launched seven years ago amid the buzz of autonomous vehicle technology, is shutting down after failing to secure new funding, Kirsten exclusively reports.
Meme stock: In a new SEC filing, Reddit reveals that, following its IPO, it’ll allow its community members to sell their shares immediately instead of being subject to the usual lock-up agreements that prevent IPO investors from selling shares for six months.
Banking as a service: U.K.-based Griffin Bank , an API-driven banking-as-a-service (BaaS) platform, just obtained a license to launch as a fully operational bank — and raised $24 million from investors, including MassMutual Ventures, NordicNinja and Breega.
EU breaches data rules: An investigation into the European Union’s use of Microsoft 365 has found that the European Commission, the cabinet government of the EU, breached the bloc’s data protection rules through its use of the cloud-based productivity software.
Deepfakes go royal: Amanda writes about how a photo of Kate Middleton and her children, possibly edited with the help of AI, is an omen of what’s to come as AI deepfaking and editing tools proliferate.
Relaxation device: Haje goes hands-on with Moonbird’s relaxation device, which is designed to help customers find sleep and reduce stress through breathing exercises.
This week on Equity , Alex looked at data from Carta on how startup compensation is changing, raises from Empathy and Bear Robotics and developments from Bluesky, Brave and Chamath Palihapitiya’s VC firm Social Capital.
On Found , Becca and Dom spoke with Rebecca Hu, the CEO and co-founder of Glacier, an AI robotics company that’s building robots to accurately sort recycling.
And on Chain Reaction , Jacquelyn interviewed Melody Hildebrandt, CTO of Fox Corporation, and Mike Blank, COO at Polygon Labs. The episode is part of Chain Reaction’s monthly series diving into different topics and themes in crypto. This month’s theme is blockchain and AI integrations.
Metaverse royale: Readyverse Studios — co-founded by blockchain tech company Futureverse and Ernest Cline, the mind behind the sci-fi series Ready Player One — this week debuted Open, a third-person battle royale experience. Lauren has the story.
