TemuTakeover
Congress is terrified about TikTok, but Temu is playing the long game
Chinese video platforms and online shopping have had a symbiotic relationship for decades. The videos are just the movie theater that brings you to the mall.
The Chinese app invasion is here and America is panicking. Well, at least our lawmakers are. They've given TikTok's Chinese owner, ByteDance, until the end of the year to divest the popular short-form app and sell it to an American owner or face a ban in the US.
The app is a financial and cultural juggernaut, but Congress’ issue with it comes down to its potential ties to the Chinese government. Legislators who support the ban, like Rep. Michael McCaul, say the app is like “a spy balloon in Americans’ phones.” Opponents of the ban, which include plenty of researchers and millions of users, see it as nothing more than a moral panic and "security theater" that won't actually do anything to protect Americans' data.
The US government's obsession with TikTok looks even more misguided, though, when you compare its popularity with other Chinese apps. According to data we've been collecting from Appfigures, which analyzes mobile-app downloads, TikTok is not China's biggest digital export right now. It’s Temu.
But to understand how the massive Chinese online marketplace conquered both Amazon and American mailboxes, we have to go back two years, to the moment Chinese apps blew up in the West.
In 2022, TikTok became the world’s most downloaded app. It saw enormous numbers on iOS, but even higher numbers on Android; in the US, it rose 58% between December 2021 and January 2022. It's possible the sudden leap may not have been totally organic. That year, Samsung customers began to notice TikTok would auto-download as an "essential app" on certain new phone models.
Regardless of what was driving it, TikTok's rapid rise was enough to spook American lawmakers. Nineteen US states announced some form of a TikTok ban for public employees at government agencies. But perhaps that panic distracted from a much bigger Chinese power play. TikTok had become the door through which other huge Chinese apps entered the US market, specifically e-commerce platforms, and the pandemic supercharged this both in China and in the US.
Since the pandemic, TikTok has emerged as the dominant social network in America. Weekly downloads peaked in early 2022 at just under 2 million, divided evenly between iOS and Android users. Other Chinese apps quickly figured out they could launch in the West by flooding TikTok with ads. Shein, the fast-fashion outlet that’s grown in the US thanks to the chaotic state of post-pandemic retail, rallied again in 2022 and stayed there. In April, Shein was downloaded over 700,000 times a week combined across Android and iOS, a milestone achievement.
Later that year, TikTok’s video-editing partner app, CapCut, saw its own explosion thanks to TikTok trends. Downloads more than doubled in the last quarter of 2022 on Android and iOS, peaking the last week of the year with close to a million iOS downloads. That was the first time CapCut surpassed TikTok, and since then it’s rarely fallen behind. But just as CapCut started lapping TikTok, Temu beat them both.
The e-commerce platform launched in August 2022 and outpaced TikTok and Shein in daily downloads on iOS and Android within three months. By the last week of 2022, the same week as CapCut’s peak, Temu had over a million weekly downloads on both operating systems. By the second half of the following year, it was consistently being downloaded at double the rate of TikTok.
After just 16 months, Temu had captured a staggering 17% of market share in the US. This year it’s forecasting $60 billion in sales. The popularity is ultimately thanks to its owners, the huge Chinese conglomerate Pinduoduo, having so much money to spend on it. And because the app’s prices are “mind-bendingly” low, the company is manufacturing most of the products itself.
Temu also rolled out with an intense marketing push, spending over $1 billion on marketing outside China. That bought it a Super Bowl ad in February and a flood of partnerships with users on TikTok and other video platforms. Speaking to MIT Technology Review in 2022, analyst Juozas Kaziukenas said the app’s success was “driven almost exclusively by ads.”
But if Temu has another secret weapon, it’s gamification. The app features simple games in the “FarmVille” mold and rewards people who regularly log in to play with free products. It also gives generous incentives and discounts for the use of referral codes, encouraging users to tell others to download the app and make purchases.
In fact, there are dozens of Facebook groups with tens of thousands of followers devoted solely to swapping codes. Reddit communities like r/Temu and r/TEMU_Official blew up in early 2023, but people were creating so many bot accounts to share codes that these communities were shut down by July for spam.
According to our data, Temu and Shein have staked out territory as the No. 1 and No. 2 most downloaded apps in the US. In June, Temu had 4.4 million downloads to Shein’s 2.4 million. Temu specifically has been so popular that Amazon is reportedly planning to emulate its discounting features. Yet despite having long since overtaken TikTok in sheer numbers, these apps haven’t faced anywhere close to the same kind of scrutiny from legal or governmental bodies, especially in the States.
It's possible that's because TikTok is a social app and Temu is an e-commerce platform. It's easier to fret about Chinese algorithms brainwashing the youth of America than it is about the increasing ubiquity of Temu's signature orange bags cluttering everyone's doorstep. But this is a very American misunderstanding of how Chinese apps work.
Chinese video platforms and online shopping have had a symbiotic relationship for decades. It's not uncommon for them to exist on the same app, like Chinese online-shopping portal Taobao, which has featured livestreaming shopping influencers for years. By 2019 newer video apps, like Douyin, were more popular than traditional online-shopping sites and even physical stores.
This would explain why TikTok is investing so much money in its TikTok Shop right now — it has always seen itself as an e-commerce platform. The videos are just the movie theater that brings you to the mall.
Some US lawmakers are finally beginning to understand this. Just this week, Arkansas filed a lawsuit against Temu, alleging the app’s true goal is to “illegally sell stolen data from Western country customers" — latching onto the same anti-China panic that spurred the TikTok ban. However it fares, the suit doesn’t seem to have sparked the same kind of debate as those against TikTok. Regardless, instead of understanding how they work and why they're so popular with Americans, or doing the hard work of developing real legal frameworks and regulations, our lawmakers are trying to put up a Great Firewall. And China has a lot more experience navigating those than we do.
Garbage Day is an award-winning newsletter that focuses on web culture and technology, covering a mix of memes, trends, and internet drama. We also run a program called Garbage Intelligence, a monthly report tracking the rise and fall of creators and accounts across every major platform on the web. And we'll be sharing some of our findings here in Sherwood. You can subscribe to Garbage Day here.
