Three things to know about TikTok’s forced US takeover

TikTok has truly revolutionised how people express themselves via their smartphones. It is not the first app that allows users to create videos. However, its easy-to-edit tools, friendly interface, short video format and appeal among youngsters who want to break social and class barriers, has turned it into a global phenomenon. 

More than 750 million people use it in dozens of countries every day - they lip sync popular songs, show off their acrobatic ability, demonstrate cooking skills,  or just film themselves spending time with a pet dog, among just about anything else of interest.

In terms of popularity, it stands alongside Facebook, Twitter and Instagram. But now the United States is forcing the Beijing-based company ByteDance, which owns TikTok, to sell its US operation. 

Here we explain why that is happening: 

1- Why is TikTok selling its US operations?

Tiktok, an app founded by Chinese national Zhang Yiming, is not selling its operations - it is actually being forced to part ways with its US operation under pressure from US President Donald Trump. 

Trump announced his intention to ban the app on July 31 citing an as of yet unsubstantiated fear that the Chinese government could gain access to information belonging to American TikTok users.  

The US is by far the largest TikTok market in terms of revenue, which it generates by selling advertisements. 

In order to avoid the ban, investors behind privately-held ByteDance are encouraging Yiming to consider a US tech firm as a potential buyer. 

TikTok faced another setback, raising the possibility of its selloff, when Kevin Mayer, a former Walt Disney executive, resigned just three months after taking over as the app’s CEO. He says it has become difficult to work in a politically charged environment. 

The US has in the past blocked Chinese firms from buying American companies and has even forced some to reverse a sale. But this is the first time a Chinese app with a significant customer base in the US is being pushed out of the market. 

Washington has long accused Chinese companies, including telecom giant Huawei, of working closely with Beijing. TikTok is an exception, as it has established itself in the market with innovation rather than winning government contracts at home. 

2- Who is interested in TikTok?

Some of the biggest names in the tech industry, such as Microsoft, Oracle and Twitter have shown interest in taking over TikTok’s US business, which ByteDance has valued at $30bn, according to The Wall Street Journal. 

Walmart, the retail giant, is also in the race as it plans to make a joint bid with Microsoft. 

The US is TikTok’s biggest market by revenue, followed by the UK, Canada and Turkey. 

Altogether, ByteDance, which also owns a news aggregation app, has been valued at $50bn. But just a couple of months ago, some analysts were putting a price tag of $100bn on the company. 

With more than a 100 million monthly active users, TikTok has become one of the most downloaded mobile applications in the US - the first Chinese app to achieve the feat. In January 2018, only 11 million Americans used it. 

Its advanced algorithms, which learn a user’s content preference and then proceeds to bombard them with videos, makes it a prized catch for marketers. 

3- How has TikTok changed content sharing 

TikTok started off in 2017 as a lip-syncing app. But its initial 15 second, now 60 second, videos have evolved into a much bigger phenomenon for its more than 700 million monthly active users. 

For teenagers, it is the ultimate on-trend fad - they spend an average of 45 minutes on the app every day. 

The point of a TikTok video is that it doesn't need to have a point. Young people share their ability to mimic artists, make funny faces, show acrobatic skills - that at times border on the silly or dangerous - but all of this brings in views and followers. 

If you are over 30 years old - as this video here explains - you’ll have some problem understanding what goes on on TikTok.  

But unlike Instagram, which some people say has been hijacked by social media influencers, TikTok has helped promote local talent. This is especially true in India, the app’s largest market in terms of customer base, where a lot of users live in villages and far-off towns. 

Take the example of a cattle herder, lip-singing to an Indian song, 

Or Armon Rathod, who cleans cars for a living, and might now be on his way to stardom. 

For ByteDance, who is finding ways to monetize the app, all of this means money.  For sceptical regulators, it raises the fear that a lot of the data can be misused if in the wrong hands. 

TikTok has not been beyond controversy and criticism. It faced a multimillion dollar penalty for holding on to names and data belonging to children under the age of 13. 

Some TikTok contests, such as the skull-breaker challenge that was promoted on the app, have been criticised for being too dangerous.