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The Story of TickTock!

TickTock, a short video format app, was founded by Alex Zhu in 2012, a man who had previously worked at SAP. The company’s founders, Alex Jew, Louis Yang, and Alex Zhu, have all played significant roles in shaping TickTock into the massive force it is today.

Alex Zhu, who was 28 years old at the time, was working at SAP, a German enterprise software company. He wanted to create a startup that focused on education technology and focused on short video formats. He called up Louis Yang and started prototyping for the first six months.

However, when real users started using the app, delivering a feed of video to smartphones was challenging. Most social media apps were primarily focused on text and photos, making it difficult for users to engage with educational content. To address this issue, Alex studied user behavior and decided to refocus on lip syncing.

A major competitor in the short video space at the time was Vine, which focused on six-second looping video clips. Alex had several advantages, including not focusing on lip syncing videos and not offering music-related creation tools. Twitter had just bought Vine and mismanaged the service, giving Alex and his team a competitive edge.

 

Alex initially launched Musically, an app focused on music and lip syncing. The app gained niche appeal due to Jimmy Fallon’s segment on his show, Lip Sync Battle, which featured celebrities with popular lip sync songs. This led to new users searching for apps where they could lip sync on the App Store.

Musically’s growth strategy was not just about algorithmic feeds, but also the creator fund. By paying top creators and connecting them with advertisers, the platform generated revenue streams for influencers, helping them stay and grow the platform. Alex also used watermarking on videos created on the platform, which still exists today with TickTock videos.

By 2016, the app had over 10 million users daily. Mark Zuckerberg, who had seen the importance of buying hot apps to keep Facebook relevant, wanted to acquire Musically to gain a strong foothold in the Chinese market. After acquisition talks with Facebook fell apart, Alex moved to Shanghai to spend more time with the product and engineering teams.

In 2017, Alex and his team successfully expanded Musically in China, despite facing challenges such as ethical considerations and the Communist Party’s censorship of content. The app’s international appeal and the introduction of Bite Dance, a major part of TickTock’s CEO’s lack of real-life experience, contributed to its success. Today, TickTock faces pressure from the Chinese Communist Party and the need for a more inclusive and transparent platform for influencers.

Musically was dominating in China and the United States, leading to the acquisition of ByteDance for nearly a billion dollars. The combined company, TickTock, became the most downloaded app for iPhones in 2018 and was used by thousands of users worldwide. However, in January 2019, an independent American Think Tank published a report calling TickTock a major threat to national security. The primary concern was that TickTock could potentially be forced to provide user data to the Chinese government upon request, which was a significant national security risk.

Chinese tech companies had developed social media platforms before but never reached the scale of TickTock. The key problem is that Chinese authorities have significant latitude to request information from private companies, and it is impossible for U.S. authorities to track what happens after it does. This has led to the Chinese Communist Party’s overreach on tech companies.

One way that the Chinese Communist Party can control tech companies is through the China Internet Investment Fund (CIIF). The fund is mostly owned by the cyberspace administration of China, which is their internet regulator. While a one percent ownership stake usually doesn’t confirm any benefits, it gives state capitalists the ability to make real decisions. When the Chinese IIFF does a deal, they receive golden shares and board seats, giving them the ability to make real decisions.

The share of private companies in China with state-connected investors has grown from 14 to 2000 to over 33 percent in 2019. This highlights the growing influence of Chinese tech companies in the global tech landscape.

The TickTock issue revolves around the control of a Chinese social media app, TickTock, by Zhang Fu Pang, who works for the Chinese Communist Party and is responsible for transmitting political direction, public opinion guidance, and value orientation into every business and product line. This has led to increasing tensions between the United States and China, with American lawmakers concerned about the company’s operations.

China has banned American social networks like YouTube, Facebook, and Twitter for years, making it difficult for Americans to access them in China. However, the algorithm that made TickTock successful might limit the damage from an outright ban. The real issue with TickTock is not any one person accessing the service, but rather the potential for swaying political opinion on a scale.

The real risk lies in China’s geopolitical rivalry and unaligned interests with the long-term interests of the United States. An outright ban on TickTock could potentially create a mess in the process. Intellectual flexibility is crucial in this situation, as the CCP has banned every American social media app in China and now controls the fastest-growing app in America.

Political tensions between the United States and China are continuing to escalate, as seen in recent restrictions on semiconductor exports. The economic battle between America and China is developing, and the TickTock issue highlights the importance of intellectual flexibility in decision-making processes.

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