TikTok’s remarkable financial performance in the United States has attracted significant attention, with reported revenues reaching an astonishing $16 billion in the past year. This surge in revenue, marking the highest in the company’s history, has substantially increased the potential valuation of TikTok’s US operations, potentially soaring as high as $150 billion. These figures are particularly notable given TikTok’s status as a subsidiary of ByteDance, its Beijing-based parent company, which reported a substantial 40% increase in revenue to $120 billion in 2023, predominantly driven by its operations in China. Despite TikTok’s robust revenue generation, it remains unprofitable, contrasting with ByteDance’s reported $28 billion in net profit last year.
However, concerns regarding the Chinese government’s influence over TikTok have escalated, leading to legislative actions aimed at addressing these concerns. The recent passage of the Protecting Americans from Foreign Adversary Controlled Applications Act by the House, with a decisive vote of 352-65, underscores the growing bipartisan consensus surrounding the need to address potential national security risks associated with TikTok’s ownership. Senate Majority Leader Chuck Schumer is facing mounting pressure to bring the bill to a vote, with President Joe Biden expressing readiness to sign it into law.
Despite resistance from TikTok, ByteDance, and the Chinese government against forced divestiture, a handful of potential buyers in the US market have emerged. Former Treasury Secretary Steven Mnuchin has signaled his intent to assemble a consortium of investors to acquire TikTok, echoing efforts made during the Trump administration’s attempt to ban the app through executive order. Additionally, former Activision-Blizzard CEO Bobby Kotick has reportedly initiated discussions with ByteDance leadership regarding a possible acquisition.
However, the formidable price tag associated with acquiring TikTok presents a significant hurdle for prospective US buyers, necessitating substantial financial resources. This challenge has prompted skepticism among industry observers, with concerns raised about the feasibility of such acquisitions, particularly for all but the largest tech companies. Despite speculation about potential buyers, including tech giants like Microsoft and Google, regulatory obstacles, particularly antitrust concerns, may hinder such transactions involving entities of significant size and market dominance.