TikTok’s Future: Who Wants to Buy and What’s the Price?

Good morning. TikTok—the app that captivated millions globally—might be changing hands soon. President Biden recently signed legislation that could force TikTok to either divest from its Chinese owner, ByteDance, or face a U.S. ban within the next year. Today, we explore what’s happening, who could be in line to buy TikTok, and what it might mean for social media and e-commerce.

In this edition:

• Who Could Buy TikTok?

• How Much Is TikTok Worth?

• What Happens Next?

Who Could Buy TikTok?

With over 170 million American users, TikTok is a valuable prize, and plenty of suitors are showing interest. Former Treasury Secretary Steve Mnuchin has publicly stated he's working on putting together a coalition of investors to make a bid. Kevin O'Leary, known from "Shark Tank," is also considering an offer, albeit for a much lower valuation—$20 to $30 billion—especially if TikTok's powerful recommendation algorithm isn’t part of the deal.

Other players like Microsoft, Oracle, Walmart, and even video-sharing platform Rumble have been floated as potential buyers. Oracle and Walmart have shown interest in the past, and Microsoft had nearly purchased TikTok in 2020 before the deal fell through.

But ByteDance’s valuation is highly tied to TikTok’s "golden jewel" algorithm—the technology behind its addictive feed. Analysts estimate that with the algorithm intact, TikTok is worth around $100 billion. Without it, that figure drops to between $30 billion and $40 billion, significantly shifting the dynamics of a potential sale.

Microsoft, Oracle, and Walmart's Interest

Microsoft was one of the top contenders to buy TikTok back in 2020. They saw it as a way to boost their consumer presence, but the deal got complicated. Microsoft wanted full control over TikTok’s operations and data, and ByteDance wasn't willing to give that up, especially with their proprietary technology on the line.

Oracle and Walmart have also been in the mix. Oracle even hosts TikTok’s U.S. data right now, which makes them a strong partner candidate. Other players like Rumble and investment groups are also interested in forming consortia if TikTok is forced to sell. The key factor here is TikTok’s "golden jewel" algorithm—analysts say it’s worth $100 billion with the algorithm, but without it, the value could drop to just $30-$40 billion. That's a game-changer for any potential sale.

How Much Is TikTok Worth?

The valuation of TikTok hinges largely on its proprietary algorithm. Wedbush Securities estimates TikTok is worth $100 billion if the algorithm—the tech responsible for curating its highly personalized content—remains part of the deal. However, if ByteDance decides to sell without it, the app's value could drop substantially.

This price disparity highlights the importance of TikTok's core technology and the challenges potential buyers may face if they need to develop a replacement algorithm from scratch. Steve Mnuchin has noted the difficulty of recreating TikTok's recommendation engine, especially given that rivals like YouTube and Meta have tried—and largely failed—to replicate its success.

What Happens Next?

ByteDance has a big decision ahead. They can choose to sell TikTok, albeit likely without the prized algorithm, or they could challenge the divestment order in court. CEO Shou Zi Chew has already indicated that TikTok will fight this bill, citing constitutional concerns and pointing to past victories, such as the blocking of Montana's state-level ban.

Meanwhile, TikTok has filed a lawsuit against the U.S. government, arguing that the forced sale would not only violate the First Amendment but also be practically unfeasible. Additionally, the Chinese government has made clear it won’t allow ByteDance to sell TikTok’s recommendation algorithm, citing national regulations on the export of sensitive technologies.

With mounting investor interest, however, the next year will be pivotal. Whether ByteDance sells TikTok, retains it, or challenges the U.S. government, the outcome could reshape the social media landscape and redefine how global tech companies operate within the U.S.

TL;DR - Key Takeaways

• TikTok could soon be under new ownership, with suitors like Steve Mnuchin, Kevin O'Leary, Oracle, and Microsoft showing interest.

• The price of TikTok hinges on its algorithm; with it, it's worth $100 billion. Without it, $30 to $40 billion.

• ByteDance has about a year to sell or face a U.S. ban, but legal battles are expected.

• January 19, 2025, is the deadline for ByteDance’s decision.

• TikTok is claiming a First Amendment violation as it fights the ban in court.

• If ByteDance doesn’t sell, TikTok could be completely removed from U.S. app stores.

The Bigger Picture for Sellers

TikTok has become a major platform for social commerce, and any shake-up could have serious implications for brands and e-commerce sellers. If TikTok changes hands, will it still be the go-to for reaching Gen Z? Sellers need to stay on top of this story, and make sure their strategies are diversified across platforms.

TikTok's uncertainty serves as a reminder that while it's an excellent platform for social selling, it shouldn't be the only one. Diversifying across platforms, including YouTube Shorts, Instagram, and Amazon Inspire, ensures sellers can reach their audience even if TikTok's future takes an unexpected turn.

Amazon Entering The Nuclear race

Optimize Amazon Listings In One Click

Getting noticed on Amazon can be tough, but Xena Foresight makes it easier. This AI-powered tool is built to do the heavy lifting—analyzing trends, understanding your competition, and highlighting what truly matters to get your products seen.

Xena Foresight generates AI-powered listings tailored for marketplaces, ensuring your products are optimized to meet platform-specific requirements and attract more buyers.

Ready to stand out? [Get your free listing analysis here.]

ECOMMERCE ESSENTIALS

From misleading SEO strategies to outdated selling tips, the e-commerce world has its fair share of pitfalls. Here’s what’s really worth your attention:

Xena Blog: Visit our blog for straightforward advice on improving your e-commerce strategy.

Podcast: Tune into "Beyond the Buy Box" for conversations with industry leaders who share practical tips and insights.

YouTube: Check out our YouTube channel for easy-to-follow guides on enhancing your online business. Don’t forget to subscribe!