Facebook Tries To Use Monopoly Wallet To Steal Popular Tik Tok Creators With 1M Fans
Facebook’s Instagram is offering incentives to lure popular TikTok creators with millions of followers to a new competing service, with payments that could potentially be in the hundreds of thousands of dollars.
The new service, Instagram Reels, is set launch in August in the U.S. and several other countries, Wall Street Journal reported. Like China-based TikTok, Reels allows users to share short-form video.
Instagram has “approached a diverse range of creators about Reels in several of the countries where it’s currently being tested,” company spokeswoman Sarissa Thrower said.
The House Judiciary Subcommittee on Antitrust has been investigating potential monopoly practices by tech giants including Facebook for more than a year.
Facebook CEO Mark Zuckerberg plans to argue that any efforts to hold the company accountable for potential violations of antitrust law would give a market edge to China, Rolling Stone reported. “Zuckerberg plans to portray his company as an American success story in a competitive and unpredictable market, now threatened by the rise of Chinese social media apps around the world,” according to a Bloomberg report.
Tik Tok is owned by ByteDance, a Beijing internet technology company. ByteDance was founded by Zhang Yiming in 2012 and has a private valuation of $105 billion to $110 billion, CNBC reported. Facebook has a market cap of $667.06 billion.
In recent years, TikTok advertised heavily on Facebook and Instagram, targeting users on their home turf. Now Tik Tok is countering Instagram’s push by announcing a $200 million fund to help its creators “realize additional earnings that help reward the care and dedication they put into creatively connecting with an audience that’s inspired by their ideas.”
Instagram is offering the most money to creators who commit to posting their videos exclusively on Reels, according to a TikTok creator who is thinking about it. For those who won’t offer exclusivity, Instagram is asking them to post their videos to Reels before other platforms, known in the industry as “first looks.”
Instagram is also offering to pay production costs for videos by popular creators WSJ reported. Instagram has used nondisclosure agreements to stop creators from sharing the terms of the potential deals, one person said.
TikTok is hugely popular with younger users; 70 percent of 10-year-old girls with smartphones in the U.S. used the app in 2019, according to Jiminy, an app for parents that measures the smartphone habits of children.
However, threats of regulations loom in the U.S. for Tik Tok. The Trump administration and some U.S. lawmakers are considering limiting access over security and privacy concerns. TikTok has said that it never provided user data to the Chinese government and will not do so.
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Facebook is also facing its own dark cloud of looming regulation over competitive and monopoly issues. Snap and other rivals have complained to federal regulators that Facebook undermines rivals. Facebook says its “acquisitions fuel innovation and its addition of new services have given consumers more choices,” WSJ reported.
Facebook this month shut down an app launched in 2018 that allowed users to post short videos and view them in an algorithmic feed, like Tik Tok. “Given that Lasso didn’t catch on, it’s not surprising to see Facebook try this tactic with a copycat product tied to Instagram,” a TikTok a spokeswoman said. “No matter how you dress things up, hundreds of millions of people truly just enjoy TikTok.”
YouTube said last week that it is testing new features that resemble video options available on TikTok.
Instagram is “responding to a demand, and working to innovate on the user experience, and our focus here is offering choice, which we believe is a great thing for people to have,” the Facebook spokeswoman said.