TikTok's secret sauce
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TikTok's secret sauce

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Good morning! This Tuesday, leaked documents hint at more than meets the eye at ByteDance, Ubisoft offers a mea culpa, and New York is rolling out new vaccine mandates.

Two sides of the same code

If the only thing you knew about TikTok came from the media, you’d think it was an evil empire built with things called “algorithms” that suck children’s brains out, turning precious teens into short-video-watching zombies. But according to internal documents leaked to The New York Times, the app’s algorithms aren’t that much different from what other companies are doing — and have been doing — for years.

This secret document is what ByteDance calls “TikTok Algo 101,” written by engineers in Beijing to explain to nontechnical TikTok employees how the app makes algorithmic recommendations.

  • The company’s “ultimate goal” is growing daily active users by increasing user retention rates and total time spent each time TikTok is opened.
  • Each video is scored by the number of likes, comments and playtime. There’s even a handy formula for success, according to the document: Plike X Vlike + Pcomment X Vcomment + Eplaytime X Vplaytime + Pplay X Vplay.

But none of this is new. Retention, use time, number of likes and comments: These are the types of numbers every website or app analyzes to make informed business decisions. It’s the premise of Web 2.0.

  • While this is standard social media practice, some would argue that what made TikTok unique is how successfully it combs through oceans of data and designs an algorithm that performs better than its competitors. We all know apps care about retention and time spent, but how should the stats be prioritized? Are 100 likes better than 10 comments?

In fact, another closely related app uses the same secret sauce. In January, a document titled “Guide to a Certain Video APP’s Recommendation (Algorithm)” was released on several Chinese platforms. While it intentionally obscured which app it’s referencing, there are plenty of hints that it’s about Douyin, TikTok’s Chinese version.

  • For one, the Chinese document describes how it makes recommendations in the exact same formula and language (yes, word for word) as the document leaked to the Times. They also used the same challenge to the algorithm as a case study.
  • And in a Q&A entry about competitors, the document mentioned three other major Chinese apps — Toutiao, Kuaishou and Weibo — that rely on recommendation algorithms, but not Douyin, the app that does it the best.
  • The two apps appear similar but have some different features, which has always led people to suspect that they run the same under the hood. But nobody outside ByteDance has been able to prove it.

ByteDance insists that it has completely separated the operations behind TikTok and Douyin, at the request of the U.S. That way, users and governments outside China don’t have to worry that the Chinese government is looking at their data. But according to the similarities in these documents, ByteDance might not be telling the whole truth. At least not yet.

  • In 2020, former president Trump waged a war against TikTok, accusing it of transferring American users’ data to China and threatening national security. But he never succeeded in forcing ByteDance to sell TikTok to an American company.
  • What ByteDance did do, in that spirit, was announce that TikTok would become a standalone company, with headquarters in Singapore and its own CEO, Shou Zi Chew.
  • But can ByteDance accomplish a clean separation between the two apps, TikTok and Douyin, when they had been designed and maintained by the same group of people for years? And when they seemingly share algorithms? There have been several reports, like this one by CNBC in June, that say TikTok is still influenced by employees on the Chinese side. The latest Times column is another example.

In November, ByteDance settled a class-action suit that said the company illegally gathered data from its users. ByteDance not enforcing the separation as the pressure from Trump has waned is a pretty strong reason for the U.S. government to come up with its own data regulation tools. Especially useful would be legislation that regulates how data is sold and transferred, sometimes outside U.S. borders, as people are worried about their data falling into the Chinese government’s hands.

China has already done this. It has enforced or proposed several legislations this year that heavily restrict the outbound flow of personal data, especially when they pertain to national security. It’s unclear whether Beijing has ulterior motives other than protecting users and national security. Totally possible: It has already helped Beijing hold DiDi back from listing in the U.S. But by acting quicker than the U.S., China is selling an example of data regulation, as Protocol’s Shen Lu wrote in August. Many Asian governments are writing their own data protection laws now, and they may end up copying from China’s playbook if no other country steps up and figures out a way to do this effectively.

— Zeyi Yang (email | twitter)

On the schedule

The year in enterprise tech

Protocol's Tom Krazit will hold a panel discussion at 10 a.m. PT Wednesday with enterprise tech executives and experts to recap the biggest developments at AWS re:Invent 2021 and preview the trends and events that will shape 2022.

RSVP here.

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People are talking

Anika Grant said Ubisoft didn’t keep employees in mind when workplace misconduct allegations came to light:

  • “I think, unfortunately, people lost trust in that process.”

Facebook is running a successful enterprise SaaS business on the sly, former Workplace head Julien Codorniou said:

  • "Workplace has proven that Facebook can build and sell IT stuff to IT buyers, HR buyers or marketing buyers. It was not easy when we started but now we're not the only one."

The chip crisis is hurting job stability for General Motors workers like Alberto:

  • “Those chips lost me my freedom.”

CryptoPunk NFTs are going for different prices based on race, gender and skin color. 2PM Inc.’s Web Smith thinks that’ll change soon:

  • “As more black investors show up in this space … those dynamics will change.”

Making moves

Rep. Devin Nunes is stepping down to lead Donald Trump’s new media company, according to The Washington Post. He was re-elected last year to serve a term that ends in 2023.

Intel is taking Mobileye public. It's a hot market for transportation companies, and Intel wants to capitalize. The company could be valued at more than $50 billion.

Kyehyun Kyung and Jong-Hee Han are Samsung's new co-CEOs. Kyung will run the company's component business, and Han will oversee the newly combined mobile and consumer divisions.

Brian Roberts is OpenSea’s new CFO. He previously worked at Lyft in the same role.

Miriam Daniel joined Google to work on Maps. She led work on Alexa and Echo before leaving Amazon last month.

Robert Mitchell is Fast’s first CFO. Mitchell most recently worked as CFO for Venmo Business Unit.

Alibaba is combining its ecommerce teams into one. The company is also creating an international digital commerce team, and Toby Xu will be its new CFO.

Richard Tame is the new CFO at Aurora. Tame has been the company’s VP of finance for over a year.

Dan Reidy is Intelligo’s new VP of sales in North America. He most recently worked at Eversight as VP of CPG enterprise sales.

In other news

The Alliance for the Future of the Internet is on hold for now, sources told Protocol. Its launch has been delayed until January after digital rights leaders argued that the plan for the alliance was rushed and flawed.

Instagram is rolling out new teen-safety tools, including one that encourages young users to take breaks. They're officially coming in March, but we'll likely hear about these a lot during Adam Mosseri's hearing tomorrow.

Craig Wright won a lawsuit over control of 1.1 million bitcoins. But it's not exactly what it seems: the man who claims to be Satoshi Nakamoto still hasn't proven he controls the first-minted coins, but he has said that he'll do so soon.

Full-time employees are running DoorDash’s 15-minute delivery operation. That's an acknowledgement that it needs employees — not gig workers — in order to enter an even faster delivery market.

Activision Blizzard workers are protesting recent layoffs. Dozens of employees at Raven Software, a studio owned by the company, stopped working yesterday after Activision let go a handful of quality assurance testers.

Get a long-term Microsoft subscription or pay more, the company told partners. Microsoft said customers who stick with a monthly subscription might pay up to 20% more than those who buy annual subscriptions.

New York City will mandate vaccines for all private employees. The new rule will go into effect Dec. 27.

Lucid Motors’ SPAC deal is being examined. It’s not the first time the SEC has investigated SPAC mergers with EV startups; the commission is also looking into deals that Lordstown Motors, Canoo and Nikola made to go public.

Donald Trump’s SPAC deal is being investigated, too. The SEC and FINRA are examining the SPAC planning to merge with Trump’s new social media company.

People paid billions of dollars for NFTs this year, according to a new report. Over the first 10 months of the year, NFT sales totaled nearly $27 billion, with the average transaction value rising toward the end of the year.

How to leverage ‘the network effect’

It’s hard to break into the tech world as a startup. For one, if new companies can’t market well enough or prove they're different from the next guy, it’s likely to flop. Andrew Chen explains how to avoid that issue in “The Cold Start Problem,” which came out today.

Chen includes talks with execs from companies like LinkedIn, Zoom, Uber and more about the network effect and how to work it into new products. The book gets at how many companies don’t fully understand network effects, even though grasping the concept can help them compete and find long-term success. Might be a good Christmas read!

Send us your recipes!

Do you work in tech? Do you like to cook? Protocol’s Anna Kramer needs your help with our annual holiday recipe cookbook! Your best recipes, holiday stories about those dishes and photos can be sent to akramer@protocol.com. And for a taste of what’s to come, check out last year’s recipe book.

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In the last 10 years, Comcast has invested $30 Billion – and $15 billion since 2017 alone – to grow and evolve America’s largest gig-speed broadband network, building more route miles and running fiber deeper to customers’ homes to help millions of people stay connected when they need it most.

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Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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