Report: Google in acquisition talks with video-sharing app Firework

Brief:

Google is in talks to buy Firework, a video-sharing app that may help the company to compete with a growing threat from TikTok, The Wall Street Journal reported, citing people familiar with the matter. Firework lets users post 30-second videos and aims to reach an older audience than TikTok, which is popular among teens.
Weibo, the Chinese social network that resembles Twitter, also had discussions with Firework, but talks with Google are more advanced, the Journal reported. Firework this year was valued at more than $100 million in a fundraising round, although Google and Firework reportedly haven't discussed pricing.
Former executives from Snap, LinkedIn and JPMorgan Chase launched Firework last year. The startup raised $30 million from venture capital firms including IDG Capital, GSR Venture and Lightspeed Venture Partners China, the Journal reported.

Insight:

Google's talks with Firework may indicate that the company sees social video app TikTok as a growing threat to YouTube, which has 2 billion users and generates 20% of Google's yearly ad revenue, the Journal reported. YouTube has been successful with its wide variety of content, ranging from user-created videos to professionally produced shows. However, the popularity of smartphones and higher-speed cellular connections have changed viewing habits, with audiences either favoring more long-form videos of 20 minutes or longer or short-form videos of 5 minutes or less, per Statista.

YouTube has found that its most successful videos are longer than 20 minutes, a trend that's supported by the platform's push for more ad revenue, Wired reported last year. Meanwhile, TikTok has a vertical video format that's geared for mobile viewing and has a time limit of 15 seconds, although users can combine four of them to create a longer video. TikTok also uses high-end artificial intelligence to help users discover new videos based on their viewing habits, and urges people to create their own videos by participating in challenges that require collaboration with other users. These features help TikTok to boost engagement, with the average viewer session lasting 9.7 minutes, ahead of Pinterest, Facebook and Reddit, Statista found.

Google's reported discussions with Firework may indicate that the search giant is seeking another way to build a social network after scaling back its ambitions for Google Plus and pulling the plug on Google Spaces, Buzz, Reader, Orkut and Meebo. Meanwhile, Google's biggest rival for digital ad dollars, Facebook, boasts more 2.7 billion users of its main social network and apps such as Instagram, Messenger and WhatsApp. The social media market is crowded with rivals like Pinterest, Snapchat and Twitter, and with more recent entrants like Epic Games, the creator of multiplayer game "Fortnite" that acquired video chat app Houseparty and acts like a social network for players.

TikTok has become popular through organic growth, combining country-specific apps into one and a merger with Musical.ly, which parent company Bytedance acquired for about $800 million. TikTok's popularity has caught the attention of Facebook, which started developing a standalone app called Lasso that takes aim at TikTok's teen audience with similar lip-syncing and video-sharing features. Snapchat also has added features like Lens Challenges in response to TikTok's popular hashtag challenges. Twitter's earlier video efforts included the acquisition of Vine in 2012, although the company shut down the service about four years later amid difficulties in monetizing its content. It remains to be seen whether TikTok will avoid the same fate.