Facebook‘s (NASDAQ: FB) Efforts to face TikTok have changed substantially in recent weeks. Earlier this month, Lasso, its standalone app that aimed to copy the mechanics of TikTok, closed. She then expanded the Instagram reels feature to India just weeks after introducing it to users in Germany and France. Reels was originally launched last November in Brazil.
The reels will soon be released in 50 more countries, including the United States, according to a NBC News report. A spokesman later confirmed the report. The next move is a sign that Instagram is seeing strong traction in its new markets, and it could mean that it is ready to scale the feature quickly. The administration may also see an opportunity: TikTok has faced increased regulatory scrutiny in recent weeks, including a ban in India.
Facebook has a unique ability to scale products and features quickly when users start to show interest. That could make Reels a big driver of engagement while stopping TikTok’s growing threat to its advertising business.
Image source: Facebook.
Defeat the small competition and face TikTok
Last year, Facebook CEO Mark Zuckerberg said he will test his TikTok competitors in markets where TikTok does not have a strong presence. Once the feature works, increasing share in those markets, it will try to take on TikTok in its strongest markets.
After India banned TikTok and 58 other Chinese apps, Facebook quickly took the opportunity to test Reels in a mass market that is already familiar with the TikTok format. But it was not the only company seeking to capture the attention of India’s 200 million former TikTok users. Roposo, a Bangalore-based TikTok rival, said it was adding up to 500,000 new users per hour at its peak after the TikTok ban.
By launching Reels to Instagram, Facebook has an advantage over most of the other competitors who are still trying to establish a user base, and that advantage seems to be proving its value. While Facebook has not commented or released any engagement data on Reels, the move to expand into markets where TikTok is doing well suggests that it is seeing good results in Brazil, Germany, France and India.
Now that Facebook has found a product that works (in addition to what doesn’t work), you can put more effort into taking on TikTok directly. And Facebook is great at scaling products when you see good engagement in a small group.
The following stories?
Instagram launched Stories in the summer of 2016. By the end of the year, it had 150 million daily users and started selling ads. It had a noticeable impact on Snap (NYSE: SNAP), which was preparing an IPO at the time.
While Snapchat had around 65 million daily active users in North America and more than 150 million users worldwide when the Instagram Stories were launched, Facebook quickly caught up and surpassed the Snap app. For reference, TikTok has around 30 million active users in the United States right now (but a much larger global user base).
One of the keys to Stories’ success was the main location on the Instagram app. While Reels likely won’t see the location above user feeds on the Instagram home page, the feature will have its own dedicated section and tab. And Instagram can direct users to Reels through feed, Stories, and Explore. With more than a billion monthly active users (more than double when Stories launched), Reels could see many new users in the coming months. If it continues to gain ground, it could be the next source of revenue growth for FAANG shares.
