- TikTok, the short-form video app, has become one of the most popular social platforms among Generation Z. It has more than 2.3 billion all-time downloads, and 100 million users in the US alone.
- However, the future of TikTok’s presence in the US is uncertain: The Trump administration is threatening to ban the app, citing national security risks over its ties to China through its parent company, ByteDance.
- Trump says he’ll ban the app if an American company doesn’t buy TikTok’s US operations by mid-September. He escalated his attack with Thursday night’s executive order barring US companies from doing business with ByteDance.
- Microsoft has emerged as a frontrunner in TikTok acquisition talks. The possible deal – in which Microsoft would take over TikTok operations in US, Canada, New Zealand, and Australia – is valued between $10 million and $30 million.
- Here’s the story of how TikTok got its start and grew into a wildly popular platform, and where the status of TikTok’s future in the US stands.
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One of the most popular apps is a short-form video platform called TikTok.
In just a few years of its existence, TikTok has become a staple of internet culture and social interaction for Generation Z. The app has surpassed 2 billion all-time downloads, thanks to its flurry of short-form videos where users participate in viral challenges, lip sync and dance to music, show off comedic skits, and share their hot takes on society at large.
But TikTok’s rise into the mainstream – especially in the US – has also led to increased scrutiny. TikTok is owned by the colossal Chinese tech company ByteDance, a connection that’s raised concerns about how much access and influence the Chinese government has to user data and content moderation. To appease concerns, ByteDance recently appointed a new CEO for TikTok, Kevin Mayer, an American ex-Disney streaming executive who is now based out of TikTok’s Los Angeles offices.
Nonetheless, the Trump administration has stepped up threats in recent month to ban TikTok in the US, where the app has more than 100 million users. Reports have emerged indicating ByteDance could sell TikTok’s US operations to an American company to avoid a ban, and Microsoft has been revealed as the leading buyer.
Now, the pressure is on ByteDance to close a deal before September 15, the date Trump has said he'll ban TikTok on if a deal is not reached. These hints at action against the app in one of its biggest markets could mean trouble for TikTok's future and the millions of users loyal to its content.
Here's how TikTok rose to become a social network loved by teens and scrutinized by US authorities:
To trace the history of this incredibly popular short-form video sharing app, it's important to note that TikTok didn't start as TikTok, but as two distinct apps that eventually merged: Musical.ly and Douyin.
Musical.ly was a short-form app where users could create and share 15-second lip sync music videos. It was founded in 2014 by Alex Zhu and Louis Yang.
Source: Business Insider
Musical.ly was originally intended for short-form educational videos, but Zhu said that idea was "doomed to be a failure."
Source: Business Insider
The app hit the No. 1 spot in the App Store in the summer of 2015, and never left the charts. From Musical.ly, a new generation of stars was created, including Jacob Sartorius.
Source: Business Insider
When the popular video app Vine closed in October 2016, many of the fresh class of young influencers who found fame by posting videos turned to Musical.ly to continue their work.
Source: New York Times
Meanwhile, in September 2016, short-form video app Douyin launched in China. Short-form video creation was nothing new for China's market, but Douyin's popularity skyrocketed. Within a year, Douyin had 100 million users and 1 billion video views each day.
Source: WalktheChat
In September 2017, Douyin expanded outside of China to select international markets under a new name — TikTok. The platform quickly rose to the top of the charts in Thailand, Japan, and other Asian markets.
Source: KrAsia
As TikTok started to gain traction globally, Musical.ly was taking over the United States.
Source: Business Insider
In November 2017, Douyin's parent company, ByteDance, purchased Musical.ly in a deal valued at $1 billion. ByteDance first operated the two short-form video apps as two separate platforms: Musical.ly in the US, and TikTok in other foreign markets.
Source: Business Insider
Less than a year later, in August 2018, ByteDance announced it would shut down Musical.ly and merge it into TikTok. All Musical.ly profiles were automatically moved over to the TikTok platform.
"Combining musical.ly and TikTok is a natural fit given the shared mission of both experiences - to create a community where everyone can be a creator," Musical.ly cofounder Zhu said at the time.
Source: Variety
TikTok's popularity has since skyrocketed in the US, where the app has an estimated 100 million users. TikTok has just under 1,500 employees in offices across the US, and has pledged to add 10,000 more jobs by 2023. TikTok's US operations are based in Los Angeles, and headed up by US general manager Vanessa Pappas.
ByteDance, which now owns TikTok, is a colossal Chinese tech company headquartered in Beijing that runs several popular social networking apps. Think of ByteDance as China's Facebook: Both companies own families of popular social networking apps used by billions of people a day.
ByteDance is run by CEO Zhang Yiming, who founded the company in 2012. Zhang's name is relatively unknown outside of China, but the 36-year-old CEO comes from a background in software engineering and is worth an estimated $16.2 billion, according to Forbes.
ByteDance's first product was a news aggregator app called Toutiao. Zhang wanted to create a news platform whose results were powered by artificial intelligence, separate from China's search engine Baidu.
Source: Bloomberg
Since 2012, ByteDance has expanded as an umbrella company for several popular Chinese social apps. In 2019, ByteDance released a WeChat-competing chat app called FlipChat, and a video-messaging app called Duoshan.
Source: TechCrunch
ByteDance is now worth $75 billion, making it the most valuable private company in the world. It's received investments from some of the biggest VC firms globally, including SoftBank, Sequoia Capital, and General Atlantic.
Source: PitchBook
TikTok is quickly gaining ground in a social scene largely dominated by powerhouses like Facebook, Instagram, and Snapchat. Worldwide, it's become home to viral challenges, has spawned internet memes, and has become particularly popular among Generation Z.
Because of TikTok's music-centric set-up, the app has become a career launchpad outside of the traditional industry. Budding artists like Lil Nas X have seen their songs go viral for uses in dances and challenges on the app. "Old Town Road" was used for countless videos and memes on TikTok ahead of its ascent to the top of the Billboard charts.
Source: Complex
TikTok has also become the newest platform to turn regular users into viral sensations and successful influencers. The No. 1 star on all of TikTok is currently Charli D'Amelio, a 16-year-old who ascended to the top less than a year after joining the platform.
Source: Business Insider
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TikTok's popularity has skyrocketed not only in the US, but around the world. Following a popularity boost during the coronavirus pandemic, TikTok surpassed 2 billion downloads worldwide in April across both iOS and Android devices, according to app analytics firm Sensor Tower.
Source: Business Insider
But the rising popularity of TikTok has also come with some controversy, due to its ties to China via ByteDance. TikTok has found itself in the crosshairs of US lawmakers, who have raised national security and privacy concerns over ByteDance's ties to the Chinese government.
The US government started investigating the app in 2019 after pressure from lawmakers. Officials have raised concern about how TikTok handles and stores user data, leading to government entities and political parties to ban the app from their employees' phones.
The investigation is being led by the Committee on Foreign Investment in the United States, a US Treasury group that has the power to approve and reject business dealings over national security risks. CFIUS's jurisdiction pertains to a review of ByteDance's 2017 acquisition of Musical.ly,
Source: Business Insider
The app's young user base has also gotten it in trouble with children's privacy officials. TikTok paid out a $5.7 million fine to the Federal Trade Commission in 2019 over allegations it illegally collected personal information from children under age 13 without parental consent, in violation of the Children's Online Privacy Protection Act.
Per the FTC settlement, TikTok promised to delete existing data it had on young users and change its practices to adhere to COPPA. However, earlier this year, privacy and child advocates accused TikTok of breaking the terms of the FTC settlement by failing to delete videos and other content obtained illegally, and failing to alter policies.
As a result, the FTC and US Justice Department are now looking into allegations it failed to live up to its 2019 agreement.
Source: Business Insider, FTC
TikTok has also faced allegations it censors content on the platform. The Guardian found TikTok had previously removed political content that would anger the Chinese government, brought on by the suspicious absence of videos of the Hong Kong pro-democracy protests in 2019.
TikTok has denied it censors content on requests from any "foreign government," and has said that none of its moderators are based in China.
Source: The Guardian
Media outlets have also uncovered TikTok policies that had censored 'culturally problematic' content — including videos featuring vaping, so-called suggestive dancing, and social issues. TikTok was also found to have censored or limited the reach of videos from disabled, queer, and fat creators. It's still unclear what policies TikTok uses to moderate its content today.
TikTok has said that it no longer adheres to these policies when monitoring content.
Source: Washington Post, Netzpolitik
Amid increasing scrutiny from the US, TikTok has tried to distance itself from its Chinese roots. On June 1, ByteDance appointed an ex-Disney executive Kevin Mayer as its global CEO, based in Los Angeles. The company also launched a content-advisory council to guide policy changes, and set up a transparency center at its LA offices.
Zhu, the Musical.ly cofounder and former head of TikTok, now serves as ByteDance's VP of product and strategy.
Source: Business Insider
It didn't take long for Mayer to face his first challenge as TikTok's new CEO: India said in June it was banning TikTok and other Chinese apps amid violent clashes with China over a disputed shared border. Mayer had to quickly address concerns from thousands of employees in India, a market making up 30% of all TikTok downloads.
Source: Business Insider
In early July, concerns around TikTok's presence in the US were reignited following comments from President Trump and Secretary of State Mike Pompeo about potentially banning the app. However, it's unclear whether Trump can actually ban the app's use in the US.
Although Pompeo cited national security fears as a reason, Trump said he was looking to ban the app as a way to punish China over the coronavirus pandemic.
Source: Business Insider
Despite accusations against TikTok of "spying" on users, it's unclear whether the app collects any more user data or poses a bigger security threat than other major tech companies based in the US, like Facebook or Google.
This accusation of spying, forwarded by the Trump administration, is based on research from March showing how apps are able to access content stored on the clipboard - the copy-and-paste feature - of users' iPhones and iPads. TikTok was only one of the dozens of the apps, including LinkedIn and Fox News, caught spying on iPhone clipboards, but that didn't stop the Trump campaign from turning the story into anti-TikTok ammunition.
Source: Business Insider
However, it's possible the Trump administration's reason for a ban could be a bit more personal. In June, swarms of TikTok teens and K-pop fans were credited with falsely inflating the expected attendance for a major Trump rally in Tulsa, Oklahoma.
Source: Business Insider
Since Trump first publicly threatened a TikTok ban in early July, American users and creators have started to panic about the app's disappearance. Other US tech companies, like Facebook, have capitalized on the chaos to try to lure TikTok's loyal following to their competing platforms.
In a blog post shared in late July, TikTok CEO Kevin Mayer explicitly called out Facebook for its "copycat product" called Reels, a new TikTok-like format soon coming to Instagram users in the US.
Source: Business Insider
ByteDance executives and investors have been exploring alternatives to avoid TikTok's ban in the US — some options include ByteDance selling off TikTok US, or spinning out the US operations as an independent US company.
Source: Business Insider, Reuters
Last week, reports emerged Trump was considering two different executive orders — one instructing ByteDance to "divest" its US operations, and another banning TikTok from the US.
According to a 1988 law, Trump has the authority to block foreign business deals pertaining to US companies if he deems the deals are a national security threat. Trump has twice previously used this authority to block deals in which tech corporations from China and Singapore were poised to take over US-based companies.
However, it's unclear what power Trump has to completely ban an app in the US.
Source: Business Insider
Microsoft quickly emerged as a potential buyer of TikTok's US operations. In the wake of Trump's comments about a ban via executive order, Microsoft announced Sunday night it was continuing "discussions" about a potential acquisition of TikTok's operations in the US, Canada, New Zealand, and Australia — a deal with an estimated valuation between $10 billion and $30 billion.
"The two companies have provided notice of their intent to explore a preliminary proposal that would involve a purchase of the TikTok service in the United States, Canada, Australia, and New Zealand and would result in Microsoft owning and operating TikTok in these markets," Microsoft said in its statement.
Microsoft also said it might invite other American investors "on a minority basis."
Trump has given TikTok until September 15 to find a US buyer, or else he'll ban app. However, it remains unclear what authority the Trump administration has to ban TikTok.
Trump also said the US Treasury should receive payment as part of TikTok's sale to a US company.
Source: Business Insider
On Thursday night, Trump dropped an executive order barring US companies from "any transactions" with TikTok and ByteDance. The order, set to take effect in 45 days, is likely to face legal challenges.
Source: Business Insider