Algorithms

If you needed any sort of reminder as to just how core algorithms are to commerce, look no further than this week’s news that ByteDance would rather shut down TikTok in the US than sell it.

The news comes after the Senate passed a bill this week that would force TikTok to sell or face a US ban.

Perhaps it’s a bluff, but there’s likely a good deal of truth to the consideration. The algorithm is TikTok’s product. Everything else stems from that.

Whether TikTok gets banned is sort of irrelevant at this point. They’ve effectively changed media consumption to rapid fire, short-form video. Everyone has followed suit. There’s nothing novel there anymore.

The fact ByteDance is signaling they’d walk away from the US market suggests they’d agree that the only thing of real value is, in fact, the algorithm.

In consumer technology, this is likely to become more and more prevalent—especially with the rise of generative AI. The underlying mechanics of how and why something gets served to a consumer has been an underpinning of ecommerce for years.

Personalization has been the brass ring of the channel. But the closer we get to it, the further we get from understanding why decisions were made. To the extent those algorithms hook users (or, in commerce’s case, customers), that lack of visibility into why algorithms work so well is exactly what’s making them increasingly valuable.