TikTok's rise in the US should serve as a cautionary tale for social media startups, as it had to spend billions of dollars on ads on rival platforms to compete
Can anyone really compete? — 1 hr … Hi all, I'm Adam Conner, longtime fan of The Margins, first-time contributor. Tweets: @readmargins , @mdudas , @adamconner , @adamconner , @hkanji , @mattzeitlin , @ruima , @aaschapiro , @readmargins , and @can . Thanks: @adamconner Tweets: Margins / @readmargins : This week on @ReadMargins, our guest writer @adamconner writes about competition in the social media space and how TikTok's ascension only speaks to Facebook's dominance in the industry. https://themargins.substack.com/ ... Mike Dudas / @mdudas : “Nearly 22% of all ads seen by U.S. Apple device users on Facebook ad network came from TikTok and its Chinese counterpart Douyin” in 1H 2018 https://themargins.substack.com/ ... https://twitter.com/... This American Adam / @adamconner : Lot of fun in this week's @ReadMargins looking at what Facebook naming TikTok as a competitor actually means about what it takes to become a competitor to Facebook (hint it includes spending billions of dollars on ads, much of it on FB). https://themargins.substack.com/ ... Tip @Techmeme This American Adam / @adamconner : Had a lot of fun thinking about what TikTok always being cited as a competitor to Facebook really means in today's @ReadMargins. Was on my mind ahead of Chairman @davidcicilline's now delayed @HouseJudiciary Antitrust hearing. Thanks to @ranjanxroy and @can for the opportunity! https://twitter.com/... Hussein Kanji / @hkanji : If advertising is the only way to grow an app to viability today, could any app without billions of dollars to spend succeed today? https://themargins.substack.com/ ... Matthew Zeitlin / @mattzeitlin : “In order to try and compete in the U.S. market, TikTok had no choice but to pay its future competitors billions of dollars in ads, giving up critical data on their targeting and successful installs along the way.” Facebook charges a toll via app install ads to any competitor https://twitter.com/... @ruima : Good read but conveniently & inaccurately reduces the raging competition inside of China ByteDance had to overcome as “sheltered conditions.” So Chinese internet giants are not “real” competition, eh? https://twitter.com/... Avi Asher-Schapiro / @aaschapiro : What if the most important thing about TikTok is what it teaches us about Facebook's market dominance & how anti-competitive the social network market is? A smart piece by @adamconner: https://themargins.substack.com/ ... https://twitter.com/... Margins / @readmargins : As Adam notes, TikTok was only able to find its footing in the US via spending upwards of a billion USD. It's hard to imagine any US-based competitor to Facebook having such deep pockets without having groomed itself in Chinese markets. @can : I'm so excited to have @adamconner guest write for us. Adam is an early Facebook (and Slack) employee who now works for a progressive think-tank in DC. He's got great insights into how TikTok's rise to prominence is only an indictment of Facebook's dominance in the marketplace. https://twitter.com/... Thanks: @adamconner
Context & Ripple Effects
Adam Conner's guest essay in The Margins makes the capital-intensity argument explicit: ByteDance's roughly $1B 2018 ad blitz — run heavily through Facebook and Instagram while also becoming Snap's largest advertiser — was the entry fee for reaching US users at all. On this reading, Facebook's ad platform functions less as neutral infrastructure than as a de facto toll booth that any challenger must pay.
The counterpoint arrived weeks later, when coverage argued TikTok partly succeeded because of Facebook's own corporate priorities, complicating the pure-gatekeeper story — just as policymakers were weighing [[a:956151|how to regulate platforms regardless of whether they sit in China, Copenhagen, or California]].
First-order effects
- Any social startup targeting US users now has to budget for billions in app-install ads bought on the incumbent's own networks, meaning Facebook profits from the very competitors trying to unseat it.
- Snap and other mid-tier platforms gain outsized ad revenue from challengers like TikTok, but sell their inventory to apps competing directly for the same attention.
Second-order effects
- Facebook's answer to the paid-for threat is product absorption rather than pricing: it began testing a full-screen immersive video player replacing the News Feed in select international markets, meeting TikTok-style consumption inside its own app.
- Because Omdia counts Facebook, Instagram, YouTube and TikTok alone at over 90% of social media ad revenue, a new entrant's ad dollars flow back into the incumbents' war chests, widening the funding gap each cycle.
Third-order effects
- If paying the incumbent's ad toll is the only viable route to scale, distribution gatekeeping becomes an antitrust question in its own right — the framing House Judiciary's antitrust work and the broader big-tech regulation debate are converging on.
- Even success bought with billions offers no insulation from geopolitics: the eventual TikTok ban pushed its audience toward other Chinese-owned apps like Xiaohongshu and Lemon8, leaving regulators chasing the next app rather than the underlying structure.
The trend: US social media is consolidating into a market where incumbents' ad networks set the price of entry for challengers, making user acquisition a capital-markets problem and platform power a regulatory one.