The pros, cons and promise of Ethiopia's TikTok revolution
TikTok has quickly become one of the most popular social media platforms in the world since its launch just a few years ago. With over one billion monthly active users globally, TikTok now rivals giants like Facebook and YouTube in terms of reach and engagement. However, the platform's rapid rise has also been accompanied by significant concerns about its potential negative impacts.
One of the key drivers of TikTok's success has been its sophisticated recommendation algorithm. Unlike older platforms that relied on user indications of likes and follows, TikTok's algorithm actively experiments and tests user engagement to improve recommendations. It will show videos it thinks a user may enjoy and gauge their reaction, learning from this to provide an increasingly tailored experience. This results in users spending significant time on the app effortlessly scrolling through an endless stream of short-form videos.
The algorithm fueled what is known as the "TikTok rabbit hole effect" where users lose track of time as they are effortlessly fed more engaging content. This stickiness has made TikTok extremely addictive, especially for youth. However, critics argue this level of algorithmically optimized engagement can be psychologically manipulative and even have long-term cognitive impacts if overused. Nevertheless, for TikTok the results have been phenomenal in terms of growing and retaining its audience.
As of early 2024, TikTok had over a billion monthly active users globally, cementing its status as one of the largest platforms. It generated an estimated USD 16.1 billion in revenue for 2023, a 67 percent increase year-over-year, showing strong commercialization potential.
- Advertisement -TikTok's growth in countries like Ethiopia has also vastly outpaced competitors, reaching around three million monthly active users versus seven million for Facebook. This points to TikTok effectively tapping into emerging markets with large youth populations as smartphone adoption increases.
Commercialization and the creator economy
As its audience and revenues have exploded, TikTok has increasingly focused on monetization through various commercial strategies. One avenue has been the flourishing "creator economy" where top influencers, celebrities and brands promote products to their massive follower bases. TikTok takes a cut of revenue from in-app purchases, gifts, and affiliate marketing commissions earned by popular creators.
The company has also launched e-commerce livestreams where viewers can directly purchase promoted goods. Some top creators have earned millions annually in this way. However, concerns have emerged around deceptive marketing practices by some influencers as well as the environmental and social impacts of overconsumption driven by commercial imperatives.
Moreover, the lack of clear oversight or transparency in creator earnings leaves room for problems. In Ethiopia, some popular fundraisers claim to collect money for medical needs but pocket significant percentages, undermining goodwill. As commercialization intensifies, stronger protections may be needed for both viewers and creators.
Content moderation challenges
As one of the largest platforms globally, significant responsibility also falls on TikTok to curb harmful, dangerous or illegal content. However, the company has faced major issues in effectively moderating TikTok's massive volume of uploads. Insufficient moderation allowed hate speech and misinformation to spread freely during crises like Ethiopia's civil war, with real-world consequences.
Automated detection also struggles with nuanced issues like implicit prejudice, manipulated media, and context-specific policy violations. Over-reliance on AI requires vast troves of labeled data, which are difficult to obtain and maintain. As a result, offensive content often slips through the cracks until reported. Some governments, including Ethiopia, have even temporarily banned TikTok temporarily over security and censorship concerns.
Compounding these technical challenges is geopolitical complexity. TikTok moderation must adapt to diverse cultural contexts while also satisfying an array of governments and regulators. This leaves enough ambiguity for malicious actors and bad faith interpretations to exploit.
Tax implications of the TikTok economy
As the creator economy on TikTok has flourished, bringing new opportunities for influencers and entrepreneurs around the world, issues around tax obligations for these digital careers have also emerged. With millions of users monetizing followers through commercial activities like sponsorships, affiliate marketing, and e-commerce on the platform, the question arises: do TikTok creators have to pay income taxes?
In most countries and jurisdictions, the answer is unequivocally yes. However, Ethiopia is currently an exception, as the government does not have policies in place to collect income tax from digital creators. While the framework may evolve in the future, creators earning income from activities on TikTok in Ethiopia are not currently expected to pay taxes on those earnings.
Content creators earning a livable income in other parts of the world, even if variable or supplemental, are generally expected to claim sponsorship or commission earnings as self-employment income subject to standard income tax rates. Just as a traditional small business owner marketing products owes tax duties, the same core principles generally apply in the digital realm.
However, tax compliance has proven challenging to regulate and enforce when income streams are informal, decentralized, and span global audiences. This challenge is especially prevalent in Ethiopia, where the lack of taxation of digital incomes intersects with lack of social welfare and financial infrastructure.
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Socioeconomic impact in emerging markets
While offering entertainment and opportunities, TikTok's socioeconomic implications in developing contexts are mixed and complex. On one hand, it allows individuals otherwise lacking platforms to showcase talents, passions, and perspectives. The promise of viral fame has inspired creativity especially among youth previously lacking outlets.
However, excessive TikTok use may compromise education and productivity when overused as an escape. Time that could be spent on skills development or civic participation is instead devoted to passive engagement. Certain content trends could also negatively influence cultural values with commercial or sexualized notions promoted by Western influencers.
Monetization is also challenging, with a minuscule percentage earning a livable income despite viral popularity. This fosters unrealistic ambitions, especially among vulnerable groups. Dependence on an algorithm's favor also breeds precarity, as popularity is fleeting without sustained skills.
In Ethiopia specifically, the lack of oversight means TikTok fame provides opportunities for deception and profiteering with little recourse for victims. Policy gaps allow some to exploit public goodwill for personal gain. Overall, balancing opportunities and risks will require context-specific solutions and alternatives to encourage healthy development.
