“Fun way to reward yourself”

A new app just topped the charts, passing Instagram, YouTube, TikTok and the newly beloved Zoom along the way. It’s call Zynn and well, it’s not that new. It’s a complete clone, down to the exact button layout, of TikTok.

It’s only difference? It pays you to watch its short videos. Time spent watching turns into points, which can then be redeemed for gift cards or cashed out via PayPal. Create an account and you’re already up a buck.

But when you go to Zynn’s bare-bones website and realize its overnight explosion, you may guess something’s up. There is…

Despite the fact that the address on Zynn’s site reads: Palo Alto, CA 94306, Zynn is actually an extension of Kuaishou, a $30B Chinese company, which just so happens to be the second place rival of Douyin, the Chinese developer of TikTok. (Ever notice how TikTok’s app icon is a ‘d’ not a ‘t’? It’s for ‘Douyin’ the original Chinese app.) Now these two Chinese competitors are battling it out for American eyeballs.

You may have already spotted an ad for Zynn within TikTok. And anyone who downloads Zynn may notice that the first and many of the video shown are actually from TikTok.

In May 2020, Kuaishou sued Douyin for “unfair competition” and with massive investors like SoftBank and ByteDance bankrolling TikTok (AKA Douyin), and Baidu and Tencent now behind Zynn (AKA Kuaishou) with a recent $2B investment, this fight is far from over. Further, with political turmoil and mounting government intervention, expect this war to be a loud one.

But back to the app, how it works, and what this all means…

Firstly, how does Zynn afford to pay users who just sit there and watch videos? Well, the app’s business model is presumably ad-based, meaning they make revenue from brands paying to be featured. As long as Zynn gives away less money to viewers than it makes from the brands, then it’s in good shape. However, Zynn has yet to run an ad as it’s currently focused on growing its user base. More on that in a second.

While some covering Zynn report how it’s a great way to make money for those now out of work due to the fallout of the coronavirus, it’s worth noting how minuscule these amounts are. They’re “micropayments.” We’re talking <$0.20 for roughly every 10 minutes watched, or a hourly wage of $1.25 for incessant scrolling and viewing. But the math isn’t that straightforward as Zynn employs “intermittent variable rewards.” Every once and a while one video watched (~66 points) is suddenly and “randomly” worth 178 or even 415 points. Pioneered by behavioral Psychologist B.F. Skinner with rats in cages, Zynn’s technique to hook users with irregular wins is the same reinforcement strategy used to addict people to slot machines and other social media apps.

Videos and points aside, the real money here comes from referrals. Users can receive $20 for every friend invited, and a “bonus” $10 for every fifth. So $110 for every five friends. But the stipulation is that they must download, sign up and continually use the app. Turner Novak, a General Partner at Gelt VC, pointed out the financial incentive to refer far outweighs the act of actually watching. In other words, the focus is on the invitation, which in effect incentivizes those invited just to do the same: invite. Some would call this a pyramid scheme — as the product becomes secondary to recruitment.

Unfortunately, a pyramid scheme may be the least of our worries if Zynn is anything like TikTok. TikTok’s individual privacy issues, pro-LGBTQ content banning, cyberbullying, user suppression, ISIS propaganda, coronavirus misinformation, COPPA violations and national security concerns may be repeated if Zynn continues to copy TikTok down to its core.

When the U.S. Army recently attempted to use TikTok to find new recruits, Senate Minority Leader Chuck Schumer (D-NY) stated in a letter, “I urge you to assess the potential national security risks posed by China-owned technology companies before choosing to utilize certain platforms.” Around the same time in 2019, Senator Marco Rubio (R-FL) requested the Committee on Foreign Investment in the United States (CFIUS) to conduct a review of TikTok’s acquisition of Muscal.ly, which allowed it to enter the U.S.

As teenagers unsuspectedly dance in their bedrooms and accumulate points for watching videos, international espionage, surveillance development, and cyberwarfare plays out in real-time. If there was ever an acute technological catalyst for the acceleration of US-China conflict, this is it.

Marc Goodman, futurist-in-residence with the FBI and author of Future Crimes, writes, “When it comes to the technological threats against our security, the future has already arrived.” He continues, “We are at the dawn of a technological arms race, between people using tech for good and those who are using it for ill. […] The problem of course is not that technology is bad but that so few understand it.” And it’s not just the technologies themselves that few understand, it’s the motives behind them.

In light of TikTok’s rise, Claudia Biancotti of The Peterson Institute for International Economics (PIIE) forecasts, “If China keeps banning Western platforms while pushing for the internationalization of its own, it stands a chance of achieving global primacy. This ascendance could lead to an advantage in other fields, as social media are generally a part of broader ecosystems where

personal data powers multiple products and services, including the development of artificial intelligence (AI) models.”

Zooming out, these apps’ surface-level features and intentions are trivial relative their deeper global motivations. TikTok’s $140B valuation is based off of more than an app that just hosts videos of kids peeing their pants and dance routines.