Rise of ByteDance's CapCut threatens market share of Adobe and Canva

By Brody Ford and Alicia Clanton

CapCut, a video-editing app owned by Chinese tech powerhouse ByteDance Ltd., is rapidly gaining steam, threatening to lure users away from Adobe Inc. and Canva Inc.
 

The app is a streamlined tool for making videos — especially with effects popular on TikTok, the social platform also owned by ByteDance. Since launching outside China in 2020, CapCut has picked up more than 300 million monthly mobile active users and commands 81% of the total active users for mobile video editing, according to market intelligence firm Sensor Tower.

That sudden dominance is tough news for Adobe, the longtime leader in desktop creative software. Its investors have worried that users would leave behind complicated professional-oriented applications like Photoshop for simplified tools made by startups like Canva or, more recently, OpenAI.

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

Mass adoption of CapCut threatens the pipeline of new users to Adobe’s Premiere Pro or After Effects, where video makers traditionally land when they need more advanced tools, said Tyler Radke, an analyst at Citigroup Inc. The emergence of generative artificial based tools such as OpenAI’s Sora threatens to further complicate the picture, he added.

For now, more seasoned video-makers such as freelance advertising editor Brianna Thompson still rely on Adobe for complex projects. But she and other professionals have started using CapCut for simpler videos. “In comparison to Adobe it’s not all the way there yet, but it’s really accessible,” she said. 

And with a new desktop app, suite of tools for small businesses and a pro version priced at $9.99 per month in the US, CapCut is branching further into professional users. Sensor Tower estimates CapCut has made $125 million so far this year on mobile. A spokesperson for ByteDance declined to comment.

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

Adobe has been developing a slimmed-down version of Premiere aimed at casual users that would run in a web browser, according to a person familiar with the issue who asked not to be identified because they weren’t authorized to discuss the topic. An Adobe spokesperson declined to comment.

Still, Subramaniam said, Adobe offers “a level of precision and control in tools that professional video editors want and cannot find anywhere else — that’s really who we’re focusing on.”

Thus far, Adobe’s attempts to gain share in the mobile editing market have not panned out — its two apps that can edit video have less than 2% of the active users of CapCut, according to the Sensor Tower data.

Canva, an Australian software firm that is among the world’s most-valuable startups, has been viewed as a disrupter in creative software. But the company’s efforts to build the definitive all-in-one visual media editor may be stymied by the rise of CapCut. Canva has been “continuously investing in video,” head of product Rob Kawalsky said in a statement. Social media video creation on Canva is up 44% compared with last year, a spokesperson said.

ByteDance’s better-known app TikTok has been the subject of long-running concern from lawmakers about potential security threats to users from the Chinese government. In April, President Joe Biden signed a law to give TikTok 270 days to find a buyer or be banned in the US, with some possibility of an extension.

That divest-or-ban law was written to include CapCut, according an aide to a House Democrat who worked on the bill and wasn’t authorized to speak publicly. As part of TikTok’s appeal to the US Justice Department against the potential ban, multiple creators touted the ease-of-use of CapCut. 

While the CapCut development team is separate from TikTok, US employees share office space in Los Angeles, according to a person familiar with the company who asked not to be identified. The division is led by ByteDance executive Kelly Zhang, who in her previous role headed TikTok’s domestic sibling Douyin.

Content creator and video editing instructor Camilo Castañeda said a CapCut ban would provide an obstacle for those starting out with video-making, or balancing it with a different job. He has already seen the effects on his students in India, where TikTok and CapCut have been banned since 2020 over data privacy concerns. “Those tools have allowed people to, without friction, create content — for those apps to go, you’re literally losing a whole revenue stream,” he said. 

If CapCut is banned, Jalen said he would look for another mobile editing app with a robust amount of promotion and tutorials from popular influencers.

“I would 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 really used Premiere before but from what I’ve seen in tutorials, it seems very intricate.”