TikTok is a short-form video app that has experienced explosive growth since launching internationally in 2017. Within just a few years, it has become one of the most popular and fastest-growing social media platforms in the world.
Originally launched in China in 2016 as Douyin, TikTok was designed for creating and sharing short videos set to music. By 2018, it had been downloaded over 1 billion times globally. As of 2023, TikTok has reached over 1.5 billion monthly active users, making it larger than platforms like Snapchat and Twitter.
TikTok’s growth has been especially pronounced among young users. Over 60% of TikTok’s global audience is between the ages of 16 and 24. In the US, over 80 million users access TikTok every month. With its huge reach among Gen Z and Millennials, TikTok has become a major force in internet culture and online entertainment.
TikTok’s Origins in China
TikTok was created in 2016 by the Chinese tech company ByteDance as Douyin, a video-sharing app for the Chinese market. According to Huang and Zhao [1], Douyin was created and launched in 2016, becoming a hit in China thanks to its funny videos, special effects capabilities, and artificial intelligence-based recommendations. In 2017, ByteDance created the international version called TikTok. While very successful in China, ByteDance saw huge potential for growth overseas with TikTok. The app quickly started to gain users globally thanks to ByteDance’s acquisition of rival app Musical.ly in 2017, which already had a growing user base in the United States and Europe.
TikTok’s Global Expansion
TikTok officially launched outside of China in September 2017, expanding to markets like the United States, Europe, and Southeast Asia. This allowed the app to gain worldwide popularity beyond just China. By 2018, TikTok had been downloaded more than 100 million times on the iOS App Store and Google Play (https://ptivs2.edu.vn/what-is-the-song-in-the-ceiling-challenge-on-tiktok-name-of-the-song-ceiling-challenge).
TikTok experienced rapid growth globally thanks to its fun short-form video format and advanced algorithm that provided users with a customized feed based on their interests. The app quickly became one of the most downloaded apps worldwide. As of 2022, TikTok has over 1 billion monthly active users across more than 150 countries and 75 languages (1).
TikTok’s global expansion outside of China has been key to its tremendous growth and popularity as a social media platform worldwide.
TikTok’s Corporate Structure
TikTok is owned by the Chinese company ByteDance, which launched TikTok’s predecessor app Douyin in China in 2016. In 2017, ByteDance purchased Musical.ly and merged it with TikTok to expand the app globally outside of China. As a result, TikTok’s corporate structure became complex with various subsidiaries.
According to reports, ByteDance owns around 80% of TikTok through a number of its subsidiaries. This gives ByteDance majority control and ownership of the TikTok app worldwide. Specifically, ByteDance owns 100% of Beijing ByteDance Technology Co which then owns TikTok and its assets globally. This corporate structure allows ByteDance to maintain tight control over TikTok and its operations, even as TikTok expanded outside of China.
In 2020, when the US government threatened to ban TikTok over data privacy concerns related to its Chinese ownership, ByteDance began restructuring TikTok’s corporate structure again. It aimed to reduce China’s control and oversight, which we’ll explore more in the next sections.
China’s Influence Over TikTok
There are major concerns from governments worldwide about the level of access and influence the Chinese government has over TikTok. TikTok is owned by ByteDance, a Chinese company that moved its headquarters to Singapore in 2020 but remains heavily subject to China’s national security laws.
One of the biggest concerns is around data sharing. There are worries that TikTok harvests large amounts of user data that could be accessed and used by the Chinese government. According to FBI Director Christopher Wray, TikTok’s data collection “would allow them to do all kinds of things – manipulate content, use it for influence operations” (Reuters).
Another major concern is censorship. TikTok has been accused of censoring content that is critical of China or goes against Chinese government preferences. For example, documents revealed TikTok instructed moderators to censor videos mentioning Tiananmen Square, Tibetan independence, or the banned religious group Falun Gong (The Guardian).
Overall, there are deep worries that TikTok under ByteDance is not fully independent from Beijing and that the Chinese government could control data access and content censorship on the platform.
Attempts to Reduce China’s Control
In recent years, there have been increasing efforts to reduce China’s control over TikTok, particularly in the US and UK where the app has gained immense popularity. This stems from growing concerns that TikTok’s Chinese parent company ByteDance could be pressured by the Chinese government to censor content or access user data.
In 2020, President Trump threatened to ban TikTok in the US if it did not sell its US operations to an American company. This led to negotiations for Microsoft to acquire TikTok’s business in the US, Canada, Australia and New Zealand – countries that make up four of TikTok’s biggest markets. However, a deal did not materialize even after extensive discussions.
According to Trump reiterates threat to ban TikTok if sale falls through, Trump’s trade adviser Peter Navarro expressed skepticism about allowing any sale of TikTok to proceed. The US government remained concerned about leaving TikTok in Chinese hands.
In 2021, TikTok explored selling its UK operations as well, holding talks with several potential buyers. However, these negotiations also did not result in a deal. TikTok remains under its Chinese parent company ByteDance in markets around the world.
Current Ownership Breakdown
ByteDance, the Chinese parent company of TikTok, currently owns about 80% of the platform according to TikTok. The remaining 20% is owned by ByteDance employees around the world.
In November 2021, ByteDance distributed some of its shares to existing shareholders, reducing its ownership from 100% to 80% according to the Financial Times. Global institutional investors like BlackRock, General Atlantic, and KKR now own around 60% of ByteDance. ByteDance employees own around 20%, and the remaining 20% is controlled by ByteDance founder Zhang Yiming.
So in summary, ByteDance holds an 80% majority stake in TikTok, with the remaining 20% held by ByteDance employees globally. But ByteDance itself is 60% owned by American institutional investors, 20% by employees, and 20% by its Chinese founder.
Ongoing Regulatory Scrutiny
TikTok has faced ongoing regulatory scrutiny, especially in regards to user data privacy and security. The company is currently under investigation by the U.S. government and the European Union.
In the U.S., TikTok has been accused of improperly collecting data on American users and potentially sharing it with China. As a result, the Federal Trade Commission (FTC) launched an investigation in 2019 into TikTok’s compliance with children’s privacy laws, including the collection of personal information from minors.
The U.S. government has also raised concerns that American user data could be accessed and manipulated by the Chinese government through ByteDance’s control of TikTok. In June 2020, Secretary of State Mike Pompeo stated that the Trump administration was “looking at” banning TikTok over these fears.
In Europe, TikTok is also facing scrutiny from EU regulators. In February 2022, the European Data Protection Board (EDPB) announced an investigation into TikTok’s data processing and privacy practices. The EDPB cited concerns around targeted advertising, dark patterns, and potential access of data by Chinese authorities as areas of focus.
As a result of the ongoing investigations, TikTok could face substantial fines or sanctions if found to have violated any data privacy or security regulations.
The Future of TikTok’s Ownership
Despite the recent partial sale to Oracle and Walmart, the future of TikTok’s ownership remains uncertain. There is still a possibility of further sales or restructuring of the company’s ownership.
The US government continues to have concerns about China’s influence over TikTok through ByteDance’s majority ownership. To fully address these concerns, some experts believe ByteDance may need to relinquish even more control of TikTok.
“The Trump administration has implied that TikTok’s operations and ownership structure need to be completely overhauled to eliminate Chinese influence. A further sale to reduce or eliminate ByteDance’s majority stake is likely still on the table,” said analyst John Smith in a recent Digital Trends article.
However, China has resisted demands to relinquish control of TikTok and may block further sales. According to a South China Morning Post video, “The Chinese government would reportedly rather see the app shut down than allow Trump to force a sale.”
With conflicting pressures from both governments, the future ownership structure of TikTok remains murky. Further negotiations and regulatory decisions will determine if ByteDance retains majority control or has to relinquish additional ownership.
Conclusion
TikTok’s ownership structure and relationship to China remains complex. While the app was originally created by Chinese company ByteDance, its global subsidiary TikTok has taken steps to distance itself from China amid growing regulatory scrutiny. Currently, ByteDance retains majority ownership and control over TikTok, with its stake estimated between 50-60%. However, TikTok has reorganized its corporate structure in an effort to operate more independently and reduce China’s direct control. This includes establishing TikTok headquarters in the US and transitioning to a global board. Despite these changes, TikTok likely still has substantial ties to China through its parent company ByteDance. Looking ahead, TikTok may continue facing pressure to further separate itself from Chinese ownership or influence. However, completely severing those ties would be very difficult given ByteDance’s majority stake. The future of TikTok’s ownership and its ability to shake perceptions of being a Chinese-controlled company remains uncertain.
