What Is TikTok?

TikTok Explained

TikTok is a free, downloadable, online app that allows members to exchange short videos and text messages with each other, with video sharing the most popular feature of the site. TikTok hosts videos that range from 15 seconds to three minutes, and the platform mostly includes videos of stunts, pranks, tricks, how-tos, and general entertainment, such as dancing and singing.

Like most social media platforms, TikTok makes money from advertising and in-app spending. Certain users, called “creators,” can also make money based on the number of views of their videos. Followers can also voluntarily “gift” money (i.e., tip) to the creators of their favorite videos.

TikTok was first released internationally in 2017, but it became a global juggernaut following its purchase of Musical.ly in August 2018. TikTok is the international spinoff of the Chinese social media site Douyin. Both platforms are privately owned by the Chinese conglomerate ByteDance.

Since its release globally in 2018 as the international version of the Chinese Douyin social platform, TikTok has seen astronomical growth in just a few years, to the point where the platform is challenging the likes of Alphabet Inc.’s (GOOG, GOOGL) YouTube, Meta Platforms Inc.’s (META) Instagram, and Snap Inc.’s (SNAP) Snapchat for total users, to name a few.

After it launched globally in 2018, TikTok came under scrutiny for allegedly harvesting users’ data and profile information. At that time, TikTok ran its global operation from a central server located in China. To mollify suspicions, TikTok moved to establish individual country server sites (India still blocks TikTok), ostensibly inaccessible from the main company in China. The move to individual country servers also allowed TikTok to avoid Chinese censorship and content restrictions. With this newfound structure, TikTok’s global growth began to skyrocket.

Parent Company ByteDance: More Than Social Media

ByteDance is not just the owner of social media giants TikTok and Douyin. Indeed, ByteDance has a portfolio of holdings spanning from education services (tutoring) to enterprise software and recently into healthcare. To put it mildly, ByteDance has ambitions far beyond the social media sphere, according to Forbes. ByteDance owns or has invested in companies including news organizations like Toutiao in China, medical sites such as the encyclopedia Baikemy, and a suite of medical information and tools (e.g., online consultations) named Xiaohe.

Furthering its ambitions in the healthcare sphere, ByteDance bought one of the largest private hospital chains in China, Amcare Healthcare, for $1.5 billion in August 2022. ByteDance is not alone among major websites in venturing out into the healthcare sphere—Amazon.com Inc. (AMZN) has expanded into the healthcare field with its acquisition of One Medical.

ByteDance’s aspirations in the healthcare field are seen as part of the Chinese government’s plan to become a leader in artificial intelligence (AI) and global health by the end of the decade. The Washington Post reported in August 2021 that the Chinese government holds an estimated 1% and has a seat on the board of ByteDance.

How TikTok Works

Members join by downloading and signing up for the app using only their email address, username, and password. If you’re concerned about the safety of your account, two-step verification is available with a phone number or your email address, where a code will be sent to that address when you seek to sign in.

Members then start a circle of friends by following other users and go on to build an ever-larger circle of friends by liking or following other members’ videos and texts. If you’re a member of TikTok and you release a video, it’s automatically visible to your circle of followers. This serves as an incentive to follow other TikTok members to build the largest circle of followers and get the most video content views possible.

TikTok users can also make money by registering as a “creator” after acquiring a sufficient number of followers, typically over 10,000 with at least 100,000 views in the last 30 days. These users can then earn 2–4 cents per 1,000 views of their videos. TikTok’s “creator fund” bases the payment amount on a number of different factors, such as the creator’s account maintenance, video suitability, and the uniqueness of views.

Hugely successful creators with millions of followers can generate significant income in this way. For example, a creator who receives 1 million views can earn $20–$40, and a user who garners 10 million views can earn $200–$400.

TikTok also uses an AI algorithm that tracks video topics that users have liked or followed in the past. As the app learns a user’s preferences—say, “cute animals”—it will increasingly display videos along the lines of those favorite subjects. To not be inundated with “cute animals” videos, for example, the algorithm will also run random videos to your account to see where else your interests lie.

Latest Regulatory Developments

On the regulatory front, TikTok has been under sporadic pressure by the US to rein in content and protect users' personally identifiable information. To date, those efforts have gone nowhere due to the popularity of the app and a heavy lobbying campaign. But US lawmakers remain leery of the app given its size and reach, so further efforts to ban the app in the US are not out of the question.

More concretely, TikTok is also facing scrutiny by the EU and needs to come into full compliance with the EU's DSA (Digital Services Act), which seeks to vigorously protect users' private data. The EU has set a September 1, 2023 deadline for TikTok to come into compliance with the DSA rules and regulations.

Failure to meet the EU's deadline could result in a ban on TikTok in the EU, according to EU Commissioner Thierry Breton. ^(cite) The EU has some of the most stringent privacy rules, and TikTok will be subject to audits of its efforts to stem potential data manipulation and filter content to protect the lives and safety of internet users. Failing an audit could cost the company up to 6% of its total revenue in fines and a potential outright ban in the EU. ^(cite)

TikTok by the Numbers 

In the graphs below, we see the breakdown of global users according to multiple advertising metrics, such as the number of monthly active users. The figures below generally understate the real picture, as it only includes users ages 18 and older, which is TikTok’s stated target audience. But a significant number of users ages 13–18 exists, adding to the already impressive stats.

Here are some other interesting facts and figures about TikTok :

• TikTok has more than 1 billion monthly active users worldwide.
• TikTok has more than 140 million active users in the United States alone.
• The TikTok app has been downloaded more than 3.5 billion times worldwide.
• TikTok users spend an average of 22.9 hours a month in the app.
• TikTok is available in more than 150 countries worldwide, using more than 35 different languages.

The Bottom Line

TikTok is a wildly popular app for streaming short-form videos on its platform. TikTok’s growth has been nothing short of spectacular over the past few years, currently at more than 1 billion active users per month. All metrics suggest that it will continue to grow quickly in the coming years.

The app is immensely popular not only among the Gen Z crowd but also with older demographic age groups, suggesting TikTok has found a formula that appeals to users of all ages. TikTok is still a privately held company, owned by ByteDance, and the prospect of it going public is nowhere on the immediate horizon. In the meantime, users will have to be content with posting videos and reaping followers—hopefully enough to generate some side income.