The social media platform that has taken the world by storm is not all it's cracked up to be...
My name is Cory, I am the President of Creative Return and the host of The Insider’s Guide To Business. The following are my insights and learnings from the interviews and dealings I have with talented entrepreneurs, operators and financiers. I hope you find them valuable and applicable in your endeavours.
Recently a friend of mine joined TikTok.
His focus is on a popular, but saturated financial niche where he is providing commentary on the ebbs and flows of the market. In less than a month, a post of his went viral with over a million views and thousands of comments.
This kind of engagement has created a digital gold rush. It is attracting millions of creators to focus their limited time and attention on TikTok over the other Social Networks - Twitter, Facebook, Youtube, Snap, etc.
Now, there are two points here and the potential of an epic scam.
The first is that TikTok is a Chinese-owned social media platform aggressively competing to take market share away from its global competitors.
Second is that, unlike publicly listed US Social Networks, TikTok is not accountable to public shareholders and requires no external auditing to validate its user numbers or engagement.
Why is this important and what does it mean in a global competition for mind-share?
US publicly listed Social Networks are required to report their financial results quarterly. There is a direct relation between the number of users they show ads to and harvest data from and the revenues they are able to generate. All of this is underpinned by a belief and requirement that ads are being shown to real people - otherwise, why would advertisers pay to show ads to fake bots?
A current example is Elon Musk's stalled takeover bid for Twitter. The deal is in peril because of concerns over the actual number of real users. The more fake users on a Social Network means there is less reason for creators to post, users to engage and advertisers to pay to display ads in front of the user audience.
Now let’s contrast that to TikTok. As a private company, there is no external obligation to report on financial or user numbers, fake or real. There are no auditors vouching that the number of users they have is accurate.
For creators/users, in the haste of the proverbial digital gold rush, very little if any concern is being put into how 'real' TikTok's user engagement actually is.
Blinded by exploding (and very possibly fake) metrics of popularity and influence, users are abandoning other social networks to stake claims on bigger followings in hopes they can monetize this.
So let's get back to the potential of a scam of global significance.
Social Networks realize that ownership of a user audience (mind share) has become a critically valuable asset and is competed for vigorously.
What if TikTok, unburdened by reporting obligations is providing inflated fake engagement for their users, compelling them to abandon their other (US) Social Networks?
The rivalry between China and the United States is increasing in intensity. This isn’t just for the nations but the corporations that compete against each other.
While US Social Network giants are bound to regulations and reporting requirements, China unapologetically plays by its own rules. This is an uneven playing field opening up the potential of a scam of global proportions.
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