As digital ad giants battle to catch up, TikTok is looming large in tech earnings reports.

As the first half of the tech earnings season comes to a close, one recurring theme has been the digital ad market’s fragility.

The situation in Ukraine, increasing prices, Apple’s privacy measures, and a general decrease in ad spending all contributed to Facebook, Google, Amazon, and Twitter reporting poor revenue statistics this week, as well as Snap last week.

But there’s another menace lurking in the distance: TikTok.

According to Insider Intelligence, the app for short viral videos has exploded in popularity, becoming the world’s third-largest social network last year, after Meta’s Facebook and Instagram.

Advertisers are paying attention to the eyes.

“Short-form video continues to absorb a larger amount of time spent throughout the business,” Atlantic Equities analysts said in a report on Thursday. “With some worry that this was posing a competitive problem for Meta, TikTok has been primarily pushing and benefitting from this trend.”

TikTok is owned by China’s ByteDance, a privately held company with a market capitalization of $140 billion. Insider Intelligence predicts TikTok will have 755 million monthly users worldwide this year, with a market share of 20% this year and reaching 25% by 2024, according to Insider Intelligence.

Facebook ad revenue increased just 6.1 percent in the first quarter, according to Meta, the weakest rise in the firm’s 10-year existence as a public corporation. Total revenue fell short of analysts’ expectations, as did the company’s second-quarter forecast, which predicted a decline in revenues from a year ago.

In the short-form video industry, Facebook offers a product called Reels that competes with TikTok. According to the business, 20% of time spent on Instagram is spent on Reels, while 50% of time spent on Facebook is spent on videos, which “monetize at lesser rates” than the main offerings.

On the earnings conference, Facebook CFO Dave Wehner noted, “Mobile networks have become faster in the previous several years, and now video is the predominant way that consumers encounter information online.” “Short-form video is the most recent incarnation of this, and it’s exploding.”

ByteDance was identified as a competitor in social networks, with Meta, Snap, and Twitter, and as a competitor in digital entertainment services, including Amazon, Apple, Disney, and Netflix, in Alphabet’s annual report.

Alphabet’s first-quarter earnings this week fell short of expectations, owing in part to a major shortfall at YouTube, which was expected to increase by 25% but only grew by 14%. Consumers are spending more time on YouTube Shorts, which had 30 billion views in the quarter, up fourfold from a year earlier, according to executives.

‘Concerns about the TikTok competition’
YouTube is experimenting with ad formats on Shorts, but experts are lowering their growth forecasts in the meanwhile. Stifle decreased its second-quarter growth rate estimate for YouTube to 10% from 13%, while Cowen Equity Research lowered its forecast to 7.5 percent from 19.7 percent.

“We think revenue numbers were mostly OK,” BMO Capital Markets analysts said in a Wednesday note, “but not enough to calm investors’ mounting ad recession fear, nor developing TikTok competition concerns after YouTube failed again, and by a bigger margin than before.” They advise that you acquire the stock.

Snap announced poor earnings last week, with CEO Evan Spiegel telling investors that the quarter “proven to be more challenging than we had anticipated.” Twitter also reported a revenue shortfall in the first quarter on Thursday. Because it is in the process of being bought by Elon Musk, the firm has declined to comment.

After that, there’s Amazon.

Unlike the other social media networks, Amazon’s relationship with TikTok is less obvious. Brands who promote their items on Amazon’s dominating e-commerce site and applications are the most common advertisers.

Even Amazon’s fast-growing ad division, which grew 23 percent year over year to $7.88 billion, fell far short of analysts’ expectations. According to StreetAccount, Wall Street predicted $8.17 billion.

In a statement, Amazon CEO Andy Jassy stated, “The epidemic and ensuing war in Ukraine have brought unprecedented growth and difficulties.” He was alluding to the company’s overall slowing.

The topic of advertisements didn’t come up much during the company’s results conference. It was a much bigger deal in other places.

On the company’s call, Michael Nathanson, an analyst at MoffettNathanson, told Alphabet management, “We’re hearing there’s rising worry that TikTok is a rival to YouTube’s mobile position.”

In a report, Loop Capital analysts said, “Bears will likely point to deterioration at YouTube, coinciding with increased worry regarding engagement shift and the monetization ramp at TikTok.”

Alan Gould of Loop brought the topic up with Facebook officials.

On the call, Gould stated, “You were fairly candid about the competition challenges on TikTok, which appears to be affecting the entire business now.” “Is there any way to measure how much TikTok affects Facebook?”

Wehner praised Facebook’s in-house product.

“I believe it’s clear that short-form video is a tremendous potential for the industry as a whole,” Wehner said. “We’re extremely excited about the product that we have with Reels and the possibility for us to compete for market share and time.” “Of course, other rivals have good offers like TikTok, but we’re happy with Reels and the work we’re doing to expand that crucial product.”