- Trump admin. plans ban on TikTok and other Chinese software
- Microsoft and investors seek to acquire TikTok U.S.
- 80 million monthly active U.S. users - most popular U.S. app download in Q1
After being banned in India last month, China's short video messaging app TikTok now faces a ban in the U.S. due to national security concerns. Microsoft is in advanced talks to buy the Gen Z favorite's U.S. operations, which has up to 80 million active monthly users, after Trump indicated Friday he will sign an executive order. Launched in 2016 and introduced in the U.S. market in 2018, TikTok insists that all data collected in the U.S. stays in the country. CEO Kevin Mayer, Disney's former streaming chief, has promised greater transparency and made public the code that drives algorithms on the platform, as he fights for its survival. A "broad array" of Chinese-owned software may soon be targeted, according to U.S. Secretary of State Michael Pompeo.
TikTok is owned by ByteDance, the most valuable unicorn in the world with a valuation of $140 billion, according to CB Insights. Its investors include Sequoia Capital China, SIG Asia Investments, Sina Weibo and SoftBank Group. The company has spent $800,000 lobbying the U.S. government in the first half of 2020, up from $270,000 in the entirety of last year, as relations between the U.S. and China deteriorated.
The app and its cheesy dance routines exploded in popularity this year during the quarantine. It crossed 2 billion installs globally in April and was downloaded more than 300 million times in the first and second quarter, according to SensorTower, creating a group of minor celebrities. The only other apps to ever surpass 300 million installs in a quarter are Zoom (Q2 2020) and Pokémon GO (Q3 2016). In the U.S., it has been in the top two apps by downloads in both Q1 and Q2 2020.
Q2 2020 Apps by U.S. Downloads
President Trump is opposed to Microsoft buying TikTok in the U.S., a deal supported by the Chinese app, according to The Wall Street Journal. The U.S. tech giant "is prepared to continue discussions" and has vowed to close the deal by Sept. 15, and ensure all private data of American users is transferred to and remains only in the U.S. Its proposal also includes buying the app's services in Canada, Australia, and New Zealand. TikTok has agreed to create 10,000 jobs in the U.S, with ByteDance divesting completely (no minority stake) as part of the deal. ByteDance has also received a proposal from some of its investors to transfer majority ownership of TikTok to them in a deal that values it at around $50 billion, Reuters reported.
If the deals fall through, and TikTok is banned in the U.S., the public backlash will be fierce, and the potential corporate beneficiaries are pretty obvious. Popular accounts have shared tearful goodbyes and diverted followers to Facebook's Instagram and Google's YouTube for more content. Facebook is also launching its 15-second video app Reels in the U.S. this month. There are other smaller players that stand to gain, too. According to Sensor Tower, in the two weeks following the White House’s comments in early July, an American app called Byte created by Vine co-founder Dom Hofmann, hit 1.3 million downloads, a figure that’s 163 times larger than the 8,000 it saw in the two weeks prior. New York-based Dubsmash saw a boost of about 282%, climbing from 118,000 downloads to 451,000.