No, Tencent Does Not Own TikTok – It‘s Owned by ByteDance
Unlike what some may assume, TikTok is not owned by major Chinese conglomerate Tencent. TikTok is actually owned and operated by ByteDance, a Beijing-based technology company founded in 2012. While Tencent has a small minority investment in ByteDance, it does not control or own TikTok.
In this comprehensive guide, we‘ll dive into TikTok‘s true ownership, explosive growth, concerns around its Chinese roots and more.
TikTok‘s Rise to Global Pop Culture Phenomenon
In just a few short years, TikTok has become one of the most downloaded and influential social apps worldwide. Some mind-blowing stats about TikTok‘s popularity:
- Over 1 billion monthly active users worldwide as of 2021 [1]
- 3.5 billion total downloads globally across iOS and Android [2]
- Top 5 most downloaded app of 2020 and 2021 [3]
- Average user spends 52 minutes per day on TikTok [4]
But TikTok wasn‘t always the viral video beast we know today. Let‘s look at the origin story and key growth milestones of this unique app.
Humble Beginnings as Musical.ly
TikTok‘s foundation traces back to musical.ly, a Shanghai-based video sharing app focused on lip-syncing and singing along to music. Musical.ly was launched in 2014 by co-founders Alex Zhu and Luyu Yang.
The app gained a strong community around creating and watching original short-form singing videos. This vibrant user base laid the groundwork for what would become TikTok‘s core audience.
Merger With ByteDance in 2017
In November 2017, musical.ly was acquired by Beijing-based ByteDance for $1 billion [5]. ByteDance had already launched a similar short video app called Douyin in China in 2016.
Under ByteDance‘s ownership, musical.ly was merged into TikTok to create one consolidated video platform. This gave TikTok the technology and user base to expand globally.
TikTok‘s Addictive Algorithm
A key part of TikTok‘s success is its incredibly accurate recommendation algorithm. The For You feed analyzes your interests based on the videos you like, share and create. It then serves you a never-ending stream of personalized, engaging content.
Unlike social platforms like Instagram that rely on who you follow, TikTok‘s algorithm figures out your tastes even before you follow anyone. This creates an addictive, video-bingeing experience that keeps you endlessly scrolling.
Monthly Active Users Skyrocket
Thanks to its merger with musical.ly and recommendation algorithm, TikTok saw meteoric growth following its 2017 launch:
| Year | Monthly Active Users |
| Jan 2018 | 54 million [6] |
| Jan 2019 | 271 million [7] |
| April 2020 | 800 million [8] |
| July 2021 | 1 billion [9] |
As these stats show, TikTok gained nearly 1 billion monthly users within just 3 years. This put its popularity on par with social media titans like Instagram.
Who Actually Owns and Operates TikTok?
For those confused about TikTok‘s ownership, let‘s break it down clearly:
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TikTok is owned completely by ByteDance, a Beijing-based technology company founded in 2012 by Zhang Yiming.
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ByteDance also owns Douyin (the original Chinese version of TikTok) along with other services including news platform Toutiao.
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Major investors in ByteDance include Sequoia Capital, General Atlantic, KKR, SoftBank and Hillhouse Capital Group [10].
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As ByteDance‘s majority shareholder, Zhang Yiming maintains control over the company and its properties like TikTok.
Tencent, the Chinese conglomerate behind WeChat, does have a small minority stake in ByteDance. However, Tencent does not control or own TikTok itself.
In fact, TikTok grew independently from Tencent‘s ecosystem and has even competed against it at times. For example, ByteDance sued Tencent in 2018 over content copyright issues involving its news aggregator app [11].
So in summary – 100% of TikTok is owned and operated by Zhang Yiming‘s ByteDance, not Tencent. Tencent is simply one of many institutional investors in ByteDance the parent company.
Addressing Concerns Around Chinese Ownership
The fact that TikTok is owned by a Beijing-based company has reasonably raised concerns for users and government entities. Some of the main worries involve:
Data Privacy
- Could TikTok user data be accessed by the Chinese government?*
TikTok claims user data is firewalled from China and not shared with any government entities. But because ByteDance is based in China, it is still subject to Chinese cybersecurity laws that could compel handing over data if requested.
According to TikTok, international user data is stored on servers in Singapore with backups in the U.S. [12]. But some experts argue ByteDance could still potentially access this data. More transparency around security practices from TikTok would help assure users.
Censorship
Will TikTok restrict content that doesn‘t align with Chinese government views?
ByteDance has said TikTok moderation policies for markets outside of China are not influenced by the Chinese government [13].
But TikTok has been accused of censoring content that is critical of China regarding issues like Xinjiang forced labor camps and the Hong Kong protests to placate the government [14].
More independent auditing of TikTok‘s moderation systems could help ensure they uphold free expression and don‘t censor on Beijing‘s behalf.
Aggressive Data Collection
Does TikTok‘s thirst for data go beyond what‘s needed to operate the app?
Researchers have found TikTok collects much more user data than required for its services to function, including precise location, device identifiers and network information [15].
TikTok should be more transparent about what user data is collected, how it is used, and provide users more control over their privacy settings. Data collection should be proportional to delivering the app‘s services.
The Financial Scale and Valuation of TikTok
For being less than 5 years old, TikTok has reached an incredible scale in terms of users, revenue and valuation:
- ByteDance total revenue for 2021 was ~$35 billion [16]
- TikTok alone generated ~$4 billion in global revenue in 2021 [17]
- As of 2021, ByteDance employed over 100,000 people globally [18]
- In 2020, ByteDance was valued at $140 billion in private secondary market trades [19]
- Estimates for TikTok‘s value range from $50 billion to over $100 billion [20]
TikTok has become a money-making machine thanks to advertising revenue. Brand sponsorship of influencers‘ videos has also become a major marketing channel.
According to SensorTower, TikTok users spent approximately $924 million in-app globally in 2021 [21]. Livestreams, virtual gifts and tipping creators directly contribute to revenue.
As long as user growth and engagement remain strong, TikTok is poised to be a very valuable standalone business if ByteDance were to spin it out.
The Visionary Founder Behind TikTok
While less known than tech moguls like Mark Zuckerberg, Zhang Yiming is the brilliant founder responsible for TikTok. Some key points on Zhang‘s background:
- Born in 1983 in China‘s Fujian province, Zhang studied engineering and computer science
- Worked at Microsoft in China for 2 years before starting his own venture
- Founded ByteDance in 2012, which he grew into a multi-billion dollar company
- Launched Douyin (TikTok) in 2016 which exploded in popularity globally
- Stepped down as ByteDance CEO in 2021, but remains Chairman
- With a net worth around $35 billion, Zhang is one of China‘s richest self-made entrepreneurs
Former colleagues describe Zhang as very technology driven, detail-oriented and intolerant of mediocre work [22]. He has proven adept at understanding what engages people online.
While ByteDance maintains TikTok user data is safe, Zhang himself admitted they "faced issues related to data security" in the past [23]. Ensuring TikTok builds trust around privacy is crucial.
My Take on TikTok‘s Future Success and Challenges
In my opinion, TikTok‘s addictively fun, entertaining content will continue fueling its meteoric rise for years to come. However, concerns around national security risks posed by its Chinese ownership remain TikTok‘s Achilles heel.
I believe TikTok can maintain growth momentum if ByteDance makes a serious commitment to user privacy. Completely transparent third-party audits of its data practices are a must.
TikTok will also need to demonstrate its moderation and guidelines uphold free speech – regardless of Beijing‘s preferences. Content promoting democracy and human rights should not be restricted.
Competition from apps copying TikTok‘s model like Instagram Reels will challenge its dominance. But TikTok‘s algorithms are unmatched in keeping billions enthralled. As long as it prioritizes building user trust, TikTok will continue captivating our eyeballs.
References
[1] https://www.businessofapps.com/data/tik-tok-statistics/[2] https://www.cnbc.com/2022/09/27/tiktok-reaches-1-billion-users-launchpad-for-metaverse-social-media.html
[3] https://sensortower.com/blog/top-apps-by-downloads-2020-2021
[4] https://www.mageplaza.com/blog/tiktok-facts.html
[5] https://www.businessofapps.com/data/musically-statistics/
[6] https://techcrunch.com/2019/01/29/tiktok-is-testing-native-video-ads/
[7] https://techcrunch.com/2019/01/29/tiktok-is-testing-native-video-ads/
[8] https://www.cnbc.com/2020/04/29/tiktok-tops-2-billion-downloads-after-best-quarter-for-any-app-.html
[9] https://www.cnbc.com/2022/09/27/tiktok-reaches-1-billion-users-launchpad-for-metaverse-social-media.html
[10] https://pitchbook.com/profiles/company/268568-27#overview
[11] https://www.techinasia.com/tencent-bytedance-reach-agreement-end-suit
[12] https://newsroom.tiktok.com/en-gb/statement-on-tiktoks-content-moderation-and-data-security-practices
[13] https://www.bloomberg.com/news/articles/2019-10-17/tiktok-owner-forming-censorship-committee-following-ban-threat
[14] https://www.washingtonpost.com/technology/2019/09/15/tiktoks-beijing-roots-fuel-censorship-suspicion-it-builds-huge-us-audience/
[15] https://www.wsj.com/articles/tiktok-tracked-user-data-using-tactic-banned-by-google-11597176738
[16] https://www.cnbc.com/2022/09/16/tiktok-owner-bytedances-revenue-slowed-to-70percent-in-2021.html
[17] https://www.businessofapps.com/data/tik-tok-statistics/
[18] https://www.businessofapps.com/data/tik-tok-statistics/
[19] https://pitchbook.com/profiles/company/268568-27#overview
[20] https://www.forbes.com/sites/siladityaray/2022/03/01/tiktok-owner-bytedance-stock-fell-45-last-year-amid-regulatory-woes/
[21] https://sensortower.com/blog/tiktok-revenue-2-billion-downloads
[22] https://www.scmp.com/tech/tech-leaders-and-founders/article/3125913/why-zhang-yiming-founder-tiktok-owner-bytedance-one
[23] https://www.cnbc.com/2021/11/03/bytedance-founder-zhang-yiming-on-tiktok-data-security.html