Meta vs. TikTok – The Lesser of Two Evils

When I read that Meta is launching a campaign to demonize TikTok, I could not imagine a better example to showcase my research on market-shaping.

It’s incredible how well it illustrates a market-shaping strategy and that markets are not simply buyer and sellers, but a system of many different players who influence the shape of a market.

But enough of this and let’s get down to the actual substance.

Meta has paid a consulting firm to orchestrate a campaign focused on tainting the perception of TikTok in the public. They are planning to do this by publishing incriminating stories on news outlets, pushing dubious rumors about TikTok on their own platform (Facebook) and influencing politicians to take action against TikTok. While simultaneously, shining a good light on Facebook/Meta and their “positive” contributions to society.

Why are they doing it?

Well, Facebook’s user growth has been on the decline over the past year, while TikTok has been the “fastest-growing app” during the same time. And TikTok’s stellar growth has not gone unperceived by Zuckerberg as he named TikTok as a major obstacle to Meta in a recent investor’s call. And when a CEO acknowledges a competitor by name, it means they feel the heat. In a sense, TikTok’s growth could even be seen as a form of consumer rebellion, against the lack of innovation, against the algorithm impeding organic growth, against the fake news-echo chambers and against Facebook’s role in many international conflicts.?

So how does this relate to market-shaping?

Well, let’s look at what the consulting firm was doing. Firstly, the direct actions can not be considered to be part of traditional business strategy. The actions had nothing to do with classic strategic actions aimed at competing on a conventional supply-and-demand market. No cost leadership, no product diversification, no strategic alliances, no mergers and acquisitions, or supply chain optimization. The actions were strictly aimed at the media, politicians and the public (not only Facebook’s users).

But how do media, politicians and the public influence the market, if they are never considered to be market participants?

"They are neither customers nor suppliers." Correct, they are not. But they do participate and shape markets. A customer looking to buy a new smartphone might base their decision on a review in a media outlet. A lobbied politician might vote against regulation. Public opinion might coerce companies to make different choices. All this is shaping a market.

And Meta is more than aware, that a market is shaped by a variety of different actors. Let's look at their actions: Publish news showing how problematic TikTok is. Lobby politicians to vote in favor of regulation against TikTok. Seed and promote rumors to your massive userbase to incite discourse in order to change the public opinion. And once TikTok is considered to be a sinister company and users are looking for a better alternative, in comes Facebook/Meta with their Instagram Reels. ??

In other words, Facebook/Meta shapes the market to become the logical "only" supplier of dopamine with their Reels.

So what does it mean in practice?

A company employing such a market design approach has to tread extremely careful. While it can result in very favorable outcomes, it can also end up in scandals and detrimental to the brand image. Key in successful market design is to have an in-depth understanding of your brand image in the public, media and political sphere. The better the brand image, the more transparent these actions can be, the worse, the more invisible they have to happen; and the more scandalous it might turn out.

Facebook/Meta’s brand has lost all goodwill in the public’s eye over the past years. So it comes as no surprise, that this campaign has been branded as a scandal by the media. Instead of focusing their efforts on their modus operandi of destroying competition, rejuvenating their brand would have been better invested resources. And for this, they could have employed exactly the same actions. Focused on influencing media, public and politicians. Just leave TikTok out of it.?

This new entry in the TechWar Saga is a fantastic case to demonstrate that markets do not only consist of buyers and sellers, but a wide variety of players that can have an impact on a market.

Yes, it is nothing new that the market environment will influence the market. But that the market environment itself is influenced by the very same actors competing in the market is largely ignored.

Companies that have the ability to understand and exploit the influence of different actors on the market will be more successful in the long-run compared to strictly customer-centric companies.

It’s a transition from customer is king to system is king. Because markets do not just happen, they are made.?