Aug 28, 2020
Why TikTok is Being Sold for Billions
Billions with a B.
TikTok, now most known for its controversial ownership and forced sale by Trump is now reportedly being sold in a bidding war between Microsoft and Oracle for up to 30 billion dollars according to Daily Mail. Compared with the now-deleted video-sharing app, Vine, that sold for only 30 million dollars in 2012, TikTok shockingly surpasses Vine’s value by millions of dollars. With the apps’ premises being so similar, it is important to understand just why TikTok is worth so much.
In 2016, an app named Musical.ly emerged as a video-sharing platform. While Musical.ly was popular among younger audiences, it did not quite reach their entire target audience (13 to 18 years old). Just two years after Musical.ly was released, it merged with an up and coming app, TikTok. Ever since its merging, the app has exploded in popularity with over “800 million active users worldwide” in 2020 (Oberlo).
Even though there is no question in the app’s popularity, there is some confusion about why the app is being sold for billions of dollars. Well, according to Pitchbook, the app is actually valued at 75 billion dollars.
Although a 15-second video sharing app is not a unique idea, shorter video-sharing apps have been proven to be more popular among younger audiences. For instance, Vine also showed to be very popular among teens in its prime. However, TikTok has succeeded where Vine fell through for a few main reasons. For one, Vine had less overall users than TikTok- only 200 million actively on the app. Also, Vine shut down as an app after only four years of being on the App Store in 2016. It is no coincidence that Musical.ly arrived on the market shortly thereafter, filling the hole that Vine left. Over the past four years, TikTok has been able to expand, continuously gaining more active users.
With the current controversy surrounding TikTok’s sale, the app’s future remains unclear. Changing the app in any major way could be jarring for current members. If the sale is not handled properly, TikTok may be shut down just like its predecessor Vine. Only time will tell.
TikTok continues to gain popularity, effectively helping the platform’s selling point to rise. The app might be about to sell for 30 billion, but it would be no surprise if it sold for much more.
