- TikTok is encountering its first slowdown in U.S. user growth amidst various challenges, including disputes with Universal Music Group, competition from Instagram Reels, and regulatory threats like a proposed forced sale of its U.S. operations.
- The company’s user base stagnation, highlighted by a 9% decline in its core 18-24 age group, poses potential risks to its ad revenue, a significant income stream.
- Additionally, TikTok’s ambitions in U.S. e-commerce face backlash due to concerns over cluttered feeds and intrusive ads, as the platform aims to expand its e-commerce business substantially.
Social media giant TikTok is experiencing its first slowdown in user growth in the United States. The company faces challenges including disputes with Universal Music Group, competition from Instagram Reels, potential forced sale of its U.S. operations, and lacklustre e-commerce attempts.
Also read: Italy regulator fines TikTok US$11 million for ‘French scar challenge’
Also read: US passes bill that could ban TikTok despite resistance from Trump
TikTok’s user growth momentum has slowed down
Sources reveal that despite having 170 million users in the U.S., TikTok’s user growth momentum has slowed down. Data from Data.ai Mobile Analytics shows a 9% decline in average monthly active users among TikTok’s core 18-24 age group in the U.S. between 2022 and 2023. The stagnation could affect ad revenue, a crucial income source for TikTok.
Failed negotiations with Universal Music Group worsened TikTok’s plight, leading to the removal of artists like Taylor Swift and Drake from the platform. Universal Music Group also started deleting user-uploaded “altered” versions of its recordings, often used as “Sounds” for short video creation.
However, compared to the potential U.S. ban, the TikTok-Ultra Music Group feud is relatively insignificant. U.S. lawmakers recently proposed a bill targeting TikTok called the “Protecting Americans from Foreign App Control Act,” passed by the House last week, potentially forcing ByteDance to sell its U.S. TikTok ownership within 165 days or face removal from U.S. app stores.
TikTok faces fierce competition from Instagram Reels
Besides regulatory troubles, TikTok faces fierce competition from Instagram Reels, which has seen significant growth. While users still spend less time on Reels than TikTok, the gap is narrowing, and Reels may benefit further from the Universal Music Group dispute due to its broader music library.
TikTok’s e-commerce ambitions in the U.S. have also backfired, with TikTok Shop facing strong user opposition due to cluttered feeds and intrusive ads. Some creators worry excessive focus on shopping will damage the core video experience. In January, Bloomberg reported TikTok aimed to expand its U.S. e-commerce business tenfold, targeting a total transaction volume of $17.5 billion this year.
