When Joy Ridenhour, a junior communications major at NYU, returned home to Virginia for winter break this year, she heard familiar music coming from her parents’ phones. “I was like, huh, it’s interesting they’re watching TikTok,” she said. “But then I realized they weren't using TikTok, they had discovered Instagram Reels.”
TikTok is giving Facebook an “unprecedented” fight, as Mark Zuckerberg conceded last week, but the battle will be fiercer than many imagine. Despite the narrative that Facebook is cooked, the company is already cutting off TikTok’s growth by feeding its copycat — Reels — to people like Ridenhour’s parents, who might’ve been late TikTok adopters but likely won’t be now.
Reels may still be an inferior product, but it has several advantages that don’t fit neatly into stories about Facebook’s demise. Here are some key factors to consider when assessing the fight between the two social giants, relayed with as much nuance as possible:
Instagram’s 2 Billion Users vs. TikTok’s 1 Billion
TikTok reached 1 billion monthly users last fall — a major feat — but Instagram reportedly hit 2 billion monthly users a few months later. To maintain its fast-paced growth, TikTok must win over people like Ridenhour’s parents, who will likely see no reason to download an app that’s essentially the same as Reels. “They were never interested in TikTok,” Ridenhour said. There are 1 billion people in this camp.
That said, Instagram Reels could be a gateway drug for younger users, who may find TikTok after experimenting with Reels. Ridenhour’s 14-year-old brother, for instance, began using Reels, then downloaded TikTok, and now prefers it over Instagram.
Facebook’s Cash Reserves
When a social media company with tens of billions in cash reserves gets scared by a competitor, it typically tries to spend that competitor into oblivion. And that’s exactly what’s happening with Facebook and TikTok.
This summer, Facebook said it would spend $1 billion on creators, taking a shot at TikTok, which has disappointed creators with its own fund. Social media platforms are only as good as the people creating content for their users, and Facebook may be able to buy an edge over TikTok.
The India Factor
India was TikTok’s largest market before the Indian government banned it in June 2020. Without India, TikTok’s download growth has slowed.
In 2020, more than 911 million people worldwide installed TikTok, according to Sensor Tower. But TikTok’s downloads dropped to 670 million in 2021, a decrease of 26%. Instagram, in the same time period, saw an 8% increase (all data from Jan. 1 - Nov. 22).
TikTok doesn’t seem likely to return to India anytime soon, a major blow. “There have been multiple attempts to revive the TikTok ambition,” said Venkat Anath, an Indian tech journalist at The Signal. “That boat has sailed.”
TikTok, however, is still out-downloading Instagram, and people are spending more time on TikTok than on Instagram. “Users spent about 1.6x longer on TikTok than Instagram in 4Q21,” said Sensor Tower insights analyst Dennis Yeh. As Zuckerberg said, the challenge is unprecedented.
The Facebook Ad Platform
Ad buyers regularly take the path of least resistance, so they’ll keep spending money with Facebook. The company can’t track people as well as it once could, but it’s still a proven commodity that advertisers like, and TikTok will struggle to win away its customers.
“I rarely get primary inquiries about spending on TikTok or Snapchat; it’s always about Facebook and Instagram,” said Peter Stringer, a social media ad buyer.
TikTok is the world’s hottest app. It regularly beats Instagram’s download numbers in the US and across the globe.
TikTok, as Ritholtz Wealth’s Josh Brown said on Big Technology Podcast this week, is Facebook’s most serious competition since MySpace. That said, Reels has a lot to lean back on, and you can bet it will use those resources to ward off a quiet death.