
AI: 'Schrodinger's Cat' Day for US TikTok. RTZ #605
The Bigger Picture, January 19, 2025
As we all wake up this Sunday morning, Judgment Day as I called it last Sunday for US TikTok, is upon us. If you try to access TikTok today in the US, you get this screen:
The question now is for how long will TikTok stay dark? For over 170 million Americans, it’s a Schrodinger’s Cat type of question: is TikTok off in the US for a long time? As it has been in India for over four years now. That is the BIgger Question this Sunday.
Alive or Dead? If ‘Alive’, is it for a few days and weeks until both administrations can do a handoff from today to tomorrow? Will a bipartisan Congress listen to over 170 million US users of TikTok, and allow Bytedance led by founder/CEO Zhang Yiming, and its ‘Golden Share’ governing China government continue to operate it until a buyer and/or resolution can be negotiated?
Has China green-lit Elon Musk and/or other celebrity billionaire investors to start closing a deal on US TikTok? How long will groups of US investors and companies assemble possible bids? And what does it all mean for US tech companies, investors, advertisers, TikTok creators, and a myriad other stakeholders, with or without short reprieves by President Trump?
I’m on record saying (on TikTok of course), the higher probability is a ‘kick the can down the road’ extension, but that remains to be seen. There are layers upon layers of background negotiations, driven by geopolitical, national security, business, political, and just plain old ‘settling scores’ type of emotional and rational drivers.
Bytedance parent and US TikTok of course are preparing for the worst, with their US infrastructure partners Oracle, Amazon AWS and others. And of course courting the incoming Trump administration for some favorable winds post the inauguration tomorrow.
As the Information outlines in “TikTok in Last-Minute Dash to Prepare Retailers, Staff for Ban”:
“With a U.S. ban of TikTok just hours away, the company’s U.S. staff has been scrambling to contain the fallout for the millions of creators and merchants who have tied their livelihoods to the app.”
“The hasty arrangements underscore how TikTok leaders under CEO Shou Zi Chew seem to have been caught off guard by the failure of their legal challenge to a U.S. law forcing the app to shut down in the U.S. if Chinese parent ByteDance didn’t find a buyer by a January 19 deadline. In the past several months, staff at offsite meetings and events rarely discussed what would happen if the U.S. law signed in April took effect, according to people present.”
“But after the Supreme Court said it would uphold the law on Friday, TikTok’s options severely dwindled. Later that day, TikTok said it would make the app “go dark” on Sunday unless the Biden administration provided a “definitive statement” that it wouldn’t enforce the ban, satisfying TikTok’s service providers that they won’t be liable.”
The White House is signaling forbearance until the next administration rolls in:
“White House spokesperson Karine Jean-Pierre said that TikTok’s statement was a “stunt” and “we see no reason for TikTok or other companies to take actions in the next few days before the Trump administration takes office on Monday. We have laid out our position clearly and straightforwardly: Actions to implement this law will fall to the next administration. So TikTok and other companies should take up any concerns with them.”
And TikTok CEO Chew has been active on TikTok signaling that Trump may be of some assistance, a topic that may come up as he attends the inauguration tomorrow:
“TikTok’s Chew has said he is hopeful Donald Trump can intervene after the incoming president takes office on Monday, but the legal path forward is unclear. Trump told NBC he is likely to sign an executive order Monday, giving TikTok a 90-day extension. However, such an order could face legal challenges. A spokesperson for TikTok did not immediately respond to a request for comment.”
And the company’s US employees are seemingly in the same boat as other outside stakeholders:
“Meanwhile, for TikTok’s 7,000 U.S. employees, information has been sparse, with some learning of developments about the ban through news reports, two current employees said.”
The broader question assuming TikTok gets some sort of an extension across transitioning administrations and Congresses, are the short and long-term losers in all this drama. Again, the Information takes a crack in “Who Wins and Who Loses From a TikTok Ban”:
“It’s not just Meta Platforms, Snap and Google’s YouTube that stand to benefit if TikTok shutters in the U.S. as a result of Friday’s Supreme Court decision upholding the ban-or-sell law against the Chinese-owned app. Several small social and video apps, including Flip, Clapper and Whatnot, could also come out ahead.”
The full list of winners and losers is worth perusing. From my perspective, the real long-term losers in this drama are US users, who with TikTok have seen one of the most innovative AI driven services at Scale in recent years, OpenAI’s ChatGPT notwithstanding.
Yes, some of its Prime Innovation, its ‘FYP” (For you Page) algorithms, have been emulated by competitors like Meta with Reels, and Google/YouTube Shorts, amongst others.
But the innovations of TikTok in my view go far beyond their industry changing AI FYP algorithms. That break from traditional social graphs was just the FIRST of many original innovations by US TikTok. Others include in no particular order:
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MUSIC CLIPS: Licensing of Music clips at Scale from major publishers, with most of the music industry’s creations available for TikTok Creators to use in their short and now longer videos.
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CUSTOMER ACQUISITION AT SCALE: Marketing for new users to drive the TIkTok Flywheel in the US, by deploying billions in ads on Meta, Google and many other US Social networks. Proving that it takes money at scale, to ‘make money at scale’. After all US TikTok is running at an over $10 billion annual revenue clip on its 170+ million users, despite US users only representing under 17% of total TIkTok users worldiwide (ex-China). The US is likely around half of TikTok’s global revenues. TikTok did this by spending billions for years on customer acquisition, that then fed into their powerful flywheel of video creators and consumers. No one has emulated this at scale. Indeed, Bytedance/TikTok’s billions accounted for anywhere 10-20% plus of the annual revenues of Meta and other social media companies for years now.
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MOBILE EDITING: Giving its creators cutting edge mobile editing tools via Bytedance’s other company, Capcut. It’s an under-appreciated card in TikTok’s success.
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SHORT VIDEOS: Reframing all media, old and new, legacy and online, social and anti-social, in the conext of 30 second clips. A ‘Medium is the Message’ application at Scale if there ever was once. It may have started with meme oriented dance videos, but it now encompasses almost every walk of life for its two plus billion global users. Everything from movies to TV shows now have 30 second TikTok clips as funnels into the full, ‘real’ product. Reinventing marketing and discovery funnels for content of all type.
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EXPRESSIVE CREATOR TOOLS: Allowing massive creativity at Scale with innovative software tools for its creators and users. Again with AI/ML driven tools. way before AI was cool. For users to create shorts with immense creativity. Kind of like what Instagram did so many years ago with photo filters, and Snap with animated filters. But going far beyond.
Those are just the beginning of some key innovations that Bytedance/TikTok have brought to fundamentally remake social media globally. And a lot of these elements are utterly missed in a over-simplified debate over US vs China geopolitics and ‘national security’.
Hats off to the Bytedance/Tiktok teams, for the remarkable positive contributions they’ve made with technology and business innovations, in this AI Tech Wave to date.
That’s the Bigger Picture I’d like for us to consider, as we figure out what happens with TikTok in the US going forward. Dead or Alive like Schrodinger’s Cat. Stay tuned.
(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)