Facebook (NASDAQ: FB) is once again taking aim at short-form video social media with the launch of Reels, a video creation and sharing platform integrated with Instagram. The move puts Facebook into direct competition with the ever-controversial phenomenon TikTok. It is not the first time Facebook has tried to become competitive in the realm of short-form video content.
Reels was launched on Wednesday as an update for Instagram, adding to the popular social media app's already extensive repertoire of features. Much like TikTok, perhaps intentionally, Reels is dedicated to short-form videos. Early reviewers of Reels mentioned that much of the same content, including memes, lip-syncing to music, and so on, had already been posted to the app, indicating that Reels had already drawn a portion of TikTok's audience from the app at launch.
Days after launch, may Reels creators had gathered an audience already and were enjoying modest success as early as day one of the app's launch.
"Most of the top TikTok creators already had Instagram accounts but weren't necessarily posting the same type of content there-now many of them are porting content over and seeing strong engagement with their posts," said Stifel analyst John Egbert in an email to Barron's. "Instagram carved out some prime profile real estate for these TikTok-style videos and it seems to be working pretty well so far. But it is Day 2."
The early success may help Facebook gain an edge over TikTok, which is now facing a looming ban signed on Thursday by President Donald Trump. The ban, which also includes WeChat, will permanently remove TikTok from the United States after 45 days if it is not sold to an American firm. Microsoft (NASDAQ: MSFT) is in the process of negotiating the acquisition of TikTok's assets in the United States, Canada, Australia, and New Zealand.
Had it not been for the ban enacted by Trump, a portion of TikTok's userbase may likely have migrated to Reels anyway, given the app's controversial status in the U.S. Before Trump's ban, condemnation of TikTok had become a bipartisan talking point on Capitol Hill, with many advocacy groups also voicing their reservations about the app. Congress had even gone so far as to ban the app on federal devices, fearing potential security breaches.
Despite its massive following, TikTok's market dominance would be inevitably challenged by Reels, mainly because of Instagram's ubiquitous nature and the fact that many TikTok creators already have popular profiles and entered into Reels with an existing audience.
Instagram is no stranger to stomping out the competition either; Instagram's release of its video service was cited as the "beginning of the end" by former executives at Vine in an interview with The Verge in 2016. Vine, which in some ways is the spiritual predecessor of TikTok, was a short-form video platform bought and operated by Twitter (NASDAQ: TWTR), was snuffed out by Instagram's rapid advancements of its video platform and the massive userbase that already existed on the popular social media platform. Similarly, Instagram could have posed an existential threat to TikTok had it not been for the ban, leaving TikTok in a catch-22 that would pan out unfavorably for the platform no matter what.
For Facebook, however, the situation is looking optimistic. Investors seemed to receive the news of Reels' launch well, with Facebook's share price climbing 6.5% on Thursday and an additional 1.2% on Friday.