This analysis was first published in SvD Näringsliv, in Swedish, on February 20th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

The business models of America’s tech giants are under real pressure. They’re being challenged not only by ChatGPT, but also by China’s TikTok. Now they may be forced to open Pandora’s box.

If you want to find out where the nearest swimming pool or shoe store is, you do what almost everyone in Sweden does. You Google it. We know this because Google has a market share of around 90 percent.

You can look at the search market a bit more broadly than that, though.

The world’s second-largest search engine — one that doesn’t even show up on market share lists — is probably YouTube, which is owned by Google’s parent company Alphabet.

There, many people search for entertainment or practical things — how to fix a product, for example.

That’s how the search market has looked for over a decade.

Now there are signs that this may be starting to break open.

Microsoft has taken a position by integrating ChatGPT into its search engine Bing.

But even closer to home is another familiar source of anxiety for Western tech companies: China’s TikTok.

At a conference last year, Prabhakar Raghavan, a senior Google executive, said their internal research showed that nearly 40 percent of young people used TikTok or Instagram as a search engine when they needed to find a nearby lunch restaurant.

That’s something of a revolution in a market where Google alone generated around 444 billion kronor in revenue during 2022. An app that doesn’t even position itself as a search engine has already changed consumer behavior for millions of users.

TikTok’s success is pressing the tech giants in other ways too.

YouTube’s “Shorts” format — which, like Instagram’s “Reels,” is nearly identical to TikTok — recently changed its business model to better meet the new competition.

To attract creators to post content with them, YouTube now offers 45 percent of ad revenue on Shorts to selected creators. They’re also lowering the entry barrier for accessing the money — you only need 1,000 subscribers to qualify. TikTok’s equivalent threshold is 100,000.

YouTube has had a similar setup for regular video views for a long time. For Meta, the parent company behind Facebook and Instagram, the question is more sensitive.

According to The Information, the idea has faced strong internal opposition, including from former chief operating officer Sheryl Sandberg. The temporary payouts currently in place for Reels could therefore remain just that — temporary.

The concern is reasonable. Paying your content creators is a bit like opening Pandora’s box — once you’ve started, it can be hard to stop. For a company like Meta, where advertising accounts for almost all revenue, it’s a difficult line to draw.

On the one hand, Meta needs to create incentives for users to post content with them. On the other, they can’t cannibalize their entire business by giving away too large a share of revenue.

It’s hard to imagine this situation arising if it weren’t for TikTok.

TikTok was the world’s most downloaded app in 2022, and creators want to be on the platforms that reach the most viewers.

But as the services increasingly resemble each other — short vertical videos — there’s nothing stopping users from posting the same content on all of them simultaneously. That way, you can earn money in three places with no extra effort.

Getting people to do things by paying them might seem like a historically well-proven method. Most people would call it a “salary.” But several social media companies have for many years not needed to pay anything of the sort to the people who created the single biggest reason for visitors to show up in the first place — the users themselves.

With newfound competition from TikTok, those old certainties have now been forced into question.

There’s a certain irony of fate in American giants needing to pay salaries to creators whose primary publishing platform is a Chinese app.

And in that same app reshaping what was once the highly lucrative search market.

Expect the next few years to be very stressful for Google, YouTube, and Meta.