🥊 TikTok VS Google (TikTok’s Winning)

Welcome to The Level Ups. Modern business news for the future business leader (explained in plain-Jane English).

Today:

Let’s get into it.

Estimated reading time: 4 minutes & 30 seconds.

Large tech companies have a habit of ripping each other off.

You’re probably wondering: can’t they get sued for that? Actually no. The article there on TikTok has the details.

This is about TikTok taking its first real shot at Google.

It started when Google’s Senior Vice President Prabhakar Raghavan mentioned that TikTok is eating into their share of online searches. He notes:

Turns out young people would rather see a play-by-play video of bartenders pouring exotic drinks in that new, aesthetic lounge from @user123123123.

It’s a much richer search experience than reading a 1-star review (complaining about parking), isn’t it?

That happened naturally. Now, TikTok is directly taking on Google.

They’ve changed the character limit on captions from 300 to 2,200. Sounds like no big deal. I get it. Plus, captions? On TikTok? Really?

I’m with you. Just hear me out.

Young people aren’t looking to read much on TikTok. But it’s not about people reading the caption. It’s to help TikTok’s algorithm do a better job of answering search queries.

TikTok's algorithm reads everything. It’s powerful (and a little scary).

TikTok tracks your view history, comments, and habits. It knows you and gives you what you want. That’s why it’s so addicting.

This change only helps them do a better job. More on how your business can get ahead of this below.

Before that, I want to be clear: this should terrify Google.

That 40% of users going to TikTok are primarily Gen Z. What happens in 8 years when these people hit their 30s? I’m confident TikTok’s share will only grow.

The risk for Google is in its revenues.

Google did $69.7B in Q2 of 2022. Here’s the thing: $56.3B was from Google’s advertising. Primarily search and discover ads.

When ~80% of your money comes from the one thing TikTok targets, you’re worried (even if you’re Google).

What’s worse is that Google puts TikTok videos at the top of the results. Talk about taking one on the chin.

Google owns Youtube, which is in a good position to get ahead of this. It’s the world’s second-biggest search engine right now (after Google itself).

Youtube “shorts” are a good start. The “shorter side of Youtube” allows creators to post videos in the same style as TikTok.

There’s more. Google is developing new features to win the war over the next ten years.

Here’s the summary:

These features are okay, but I’m not sure they’ll beat TikTok. Winning with younger demographics has major advantages. Remember: Facebook and Instagram started as “young” apps too.

But are they right? Is this the future? China can help us see the answer.

Douyin, TikTok’s sister company in China, is already several years ahead.

"The future is about more than just discovery and vetting via videos, it's about actually enabling commerce,” according to Connie Chan at Andreessen Horowitz (known as "a16z").

Bytedance (parent company to both) has it all planned out.

We might use Yelp/Google to search for restaurants nearby, right?

Douyin users can search for a nearby restaurant on the app. But here's the difference - they can prepay the meal with a discount, all inside the app.

Here’s the image (from a16z).

People spend an average of 6 hours and 48 minutes per week watching online videos, so seamlessly adding purchases is a game changer.

Whoever wins the video search race will move into commerce and payments next (surely they’re already building this).

Will TikTok pull this off with over one billion global monthly users? Time will tell.

Regardless of who wins, how can you prepare?

The future is in everything-apps for content and commerce. What about right now?

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Thanks for reading!

See you tomorrow,

Darwin

PS - This is funny.

Have you heard of Canada’s ArriveCan app? The government paid $54M for it, but a programmer re-created it in two days.

Allegedly, it could have been created for ~$250K. Big blunder. Good for the developers.