ByteDance’s Capcut Growth Threatens Adobe, Canva – BNN Bloomberg

(Bloomberg) — CapCut, a video-editing app owned by Chinese technology giant ByteDance Ltd., is rapidly gaining popularity, threatening to lure users away from Adobe Inc. and Canva Inc.

The app is a simplified video-making tool — especially with effects popular on TikTok, the social media platform also owned by ByteDance. Since launching outside China in 2020, CapCut has acquired more than 300 million monthly active mobile users and controls 81 percent of all active users for mobile video editing, according to market intelligence firm Sensor Tower.

This sudden dominance is tough news for Adobe, a longtime leader in desktop creative software whose investors had feared that users would abandon complex, professional-oriented apps like Photoshop for simplified tools from startups like Canva and, most recently, OpenAI.

Jalen, a lifestyle content creator with nearly 20,000 followers on TikTok who asked to be identified by name, said he was drawn to CapCut because of its simple interface and popularity with other TikTok users. CapCut templates let users quickly customize video formats and export finished content directly to TikTok. Published videos are watermarked with a CapCut link, encouraging viewers to try the template for themselves. The entire app is “very user-friendly and ergonomic,” Jalen said.

The mass adoption of CapCut threatens to drive new users to Adobe Premiere Pro or After Effects, where video creators traditionally land when they need more advanced tools, said Tyler Radke, an analyst at Citigroup Inc. The emergence of generative AI-based tools like OpenAI’s Sora threatens to further complicate the picture, he added.

For now, more experienced video creators, like freelance advertising editor Brianna Thompson, still rely on Adobe for complex projects. But she and other professionals have started using CapCut for simpler videos. “It’s not quite there yet compared to Adobe, but it’s really accessible,” she said.

And with a new desktop app, a suite of tools for small businesses and a pro version priced at $9.99 per month in the U.S., CapCut is expanding further to professional users. Sensor Tower estimates that CapCut has made $125 million in mobile revenue this year. A ByteDance spokesman declined to comment.

Deepa Subramaniam, vice president of product marketing for creative applications at Adobe, said the company is working on ways to make its tools more accessible and powerful, such as the web-based Adobe Express app, as well as adding generative AI features.

Adobe is developing a stripped-down version of Premiere aimed at mainstream users that will run in a web browser, according to a person familiar with the matter who asked not to be identified because he was not authorized to discuss the matter. An Adobe spokesman declined to comment.

Still, Subramaniam said, Adobe offers “a level of precision and control in the tools that professional video editors need and can’t find anywhere else—that’s what we’re focused on.”

So far, Adobe’s attempts to gain market share in mobile editing have not been successful—its two video-editing apps have less than 2 percent of CapCut’s active users, according to Sensor Tower.

Canva, an Australian software company that ranks among the world’s most valuable startups, is seen as an innovator in creative software. But the company’s efforts to create the ultimate, universal visual media editor could be hampered by CapCut’s growth. Canva is “continually investing in video,” chief product officer Rob Kawalsky said in a statement. Social media video creation on Canva is up 44 percent from last year, a spokesman said.

ByteDance’s better-known app TikTok has long raised concerns among lawmakers about potential security threats to users from the Chinese government. In April, President Joe Biden signed a bill giving TikTok 270 days to find a buyer or face a U.S. ban, with some potential for extensions.

The deny-or-ban law was written to cover CapCut, according to a House Democrat who worked on the bill and was not authorized to speak publicly. As part of TikTok’s appeal to the U.S. Department of Justice against the potential ban, many creators have praised CapCut’s ease of use.

Although CapCut’s development team is independent from TikTok, U.S. employees share office space in Los Angeles, according to a person with knowledge of the company who asked not to be identified.

Content creator and video editing instructor Camilo Castañeda said the CapCut ban will be a hindrance for those just getting into video creation or combining it with other work. He’s already seen the impact on his students in India, where TikTok and CapCut have been banned since 2020 over data privacy concerns. “These tools allow people to create content without any friction — if these apps go away, you literally lose your entire revenue stream,” he said.

Jalen said that if the CapCut app is banned, he will look for another mobile app for editing content, with lots of promotions and tutorials from popular influencers.

“I’d just have to learn a new platform, but I still don’t know if I’d necessarily go with what Adobe has to offer,” Jalen said. “I’ve never used Premiere before, but from what I’ve seen in tutorials, it seems very complicated.”