TikTok's biggest success is also its biggest weakness

Hiya! It’s Alex Barinka in Los Angeles. The same algorithmic force that helps random people go viral on TikTok is also making it tough for c [View in browser]( [Bloomberg]( Hiya! It’s Alex Barinka in Los Angeles. The same algorithmic force that helps random people go viral on TikTok is also making it tough for career creators to build sustainable businesses. But first... Three things you need to know today: - BlackRock joined AI mania, calling it a potential ‘[mega force](’ - US is planning new [AI chip export controls]( aimed at Nvidia - Micron delivered strong forecast in sign that glut is [easing]( The TikTok conundrum TikTok’s meteoric rise is fueled by its algorithm, which dangles the promise of fame for anyone who posts the right video, even if they have no followers. Evidence of success keeps people posting, hopeful that they too can go viral and become a full-time creators— and maybe even get rich off of their videos. The dream was still alive at last week’s VidCon, the annual convention that wrangles more than 55,000 people from every corner of the social media content world. Internet-famous personalities posed for selfies with fans that were young enough to be accompanied by their parents. Jeana, 15, whose mother preferred not to disclose her last name, took a video on the Anaheim convention center floor swinging a bat, and posted it to Snapchat and TikTok. Like everyone else, she wants to be TikTok famous. But with 150 million US users spending more than 90 minutes a day on the app, TikTok’s AI-driven feed is both saturated and insatiable. Millions of people are posting, but the fans of their last video won’t necessarily see the next one. So to keep capturing attention, they must post even more, gambling each time that the algorithm will like it and draw an audience. “Any platform that is not built around the persona or the entity is going to have this problem,” Sean Atkins, president of creator content distribution company, Jellysmack, told me at the convention. He was drawing a contrast with platforms like Instagram and Twitch that grew from following individuals and building direct fan relationships. “In a world of infinite content and dopamine hits, it's really tough to build a community.” For influencers aiming to make money off social media, a community of fans is necessary to secure brand deals and sponsorships worth hundreds to thousands of dollars per post. Ideally, influencers can prove that people are buying products they hawk not just because of an attention-grabbing video, but because of trust they’ve built with their audience. Living off of virality alone isn’t sustainable: TikTok still pays about 3 cents per thousand video views, and only to influencers in its invite-only fund, creators said. It’s also a grind to relentlessly produce short videos for the platform, especially if you can’t expect as predictable revenue or exposure as you can on platforms like Google’s YouTube, which is known for its more generous payment scheme. TikTok virality can come fast, but it may not last. “With 90% of TikToks, you’ll never see them again because they’ll never be able to break through,” said Joe Gagliese, co-founder of influencer marketing agency Viral Nation. TikTok’s interest-based algorithm has been a source of jealousy for rivals; Instagram, for instance, is showing users more video from people they don’t follow these days. But creators are burning out. At VidCon, several told me they have to be on TikTok for now, because that’s where people are spending their time. But creators are also coming up with strategies to turn fleeting attention into long-term fandom — by posting more on rival services like Snapchat, where followers can actually consistently see their output and build a direct relationship with them. When and if they leave, the 15-year-olds are ready to pick up the attention for themselves. —[Alex Barinka](mailto: abarinka2@bloomberg.net), with [Caelyn Pender](mailto: cpender3@bloomberg.net) The big story China’s tech sector has a new obsession: competing with US titans like Google and Microsoft Corp. in the breakneck [global AI race](. One to watch [Joby's shares surged]( after receiving US regulatory approval to expand testing of its air taxi, marking another step toward building a business around electric-powered flying vehicles. Joby CEO JoeBen Bevirt joins Ed Ludlow on 'Bloomberg Technology.' Joby's Flying Taxi Is Closer to Reality With Production, Expanding Testing Bloomberg Get fully charged Stability AI, the startup that has been struggling to raise funding at a $4 billion valuation, secured a [convertible note]( from investors, according to people with knowledge of the matter. A hacking group responsible for a series of outages at Microsoft Corp. earlier this month had spent the previous months attacking targets in Israel, Sweden and other nations, part of an expanding campaign that some cybersecurity researchers have [tied to Russia](. Activision Blizzard Inc. will likely abandon a [$69 billion takeover bid]( by Microsoft if the US Federal Trade Commission wins a ruling pausing the deal, the game maker’s CEO told a judge. Oracle Corp. said its industry-leading database software can be used with a new type of processor for the first time in decades, another challenge to the dominance of Intel Corp.’s technology in the lucrative [data center market](. More from Bloomberg Get Bloomberg Tech newsletters in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Hyperdrive]( for expert insight into the future of cars Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. 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