TikTok is a subsidiary of ByteDance, a Beijing-based technology company founded in 2012 by was founded by the IT entrepreneur Zhang Yiming. ByteDance is not only known for TikTok, but also for other innovative products like the news aggregator app Toutiao.

Zhang Yiming and the founding of ByteDance
Zhang Yiming, a graduate of Nankai University, had experience in the technology industry before founding ByteDance. He was part of teams working on travel search engines and real-time streaming technologies. With ByteDance he wanted to revolutionize the way people consume and share information.

• The evolution of TikTok
  TikTok was launched in China in 2016 as Douyin and later popularized internationally as TikTok. The app allows users to create, edit and add music to 15-second videos. The combination of easy-to-use tools and an algorithm that personalizes content has made TikTok a hit.

• ByteDance’s Global Expansion
  ByteDance has not only limited itself to the Chinese market. With the acquisition of Musical.ly in 2018, the company expanded its presence in the US and other Western markets. This strategic decision has helped TikTok reach a broader user base and establish itself as a global brand.

TikTok and its parent company ByteDance’s affiliation with the Chinese government has drawn international attention and concerns.

• Legal Obligations in China
  In China, all companies, including technology companies, are subject to certain laws that require cooperation with the government regarding data access and control. China’s 2017 cybersecurity law requires companies to share data with the government when necessary. This has raised questions about data security and privacy for TikTok users outside of China.

• Censorship allegations
  There have been reports that TikTok has censored content that could be considered sensitive to the Chinese government, such as issues related to the Hong Kong protests or the situation of Uyghurs in Xinjiang. TikTok has denied these allegations, stating that its moderation policies are not influenced by the Chinese government.

• Investigations and Bans
  Concerns over TikTok’s ties to the Chinese government have sparked investigations in some countries. In the US, TikTok has been subject to a national security review, and there have been discussions about a possible ban on the app. India banned TikTok in 2020, citing ties with the Chinese government as one of the reasons

In response to these concerns, TikTok has taken steps to be more transparent about its business practices. The company has emphasizes that international users’ data is stored outside of China and that it conducts independent audits of its privacy practices. Since this cannot really be verified, one simply has to believe it. Just like Facebook claimed back in 2015, this is a data exchange between the Messenger WhatsApp and the Facebook -Platform is not technically possible. In retrospect, this not only turned out to be possible, but also intended from the start!

The economics of TikTok is an intriguing topic that sheds light on the company’s rapid expansion and financial success.

TikTok’s annual revenue has seen impressive growth over the past few years. Its revenue tops $34 billion, according to the latest reports. This is still far behind the top dog Facebook with around 116 billion US dollars, but very impressive for the relatively short time. The enormous success is due to its worldwide distribution and popularity, especially among young people.

Global expansion
TikTok has aggressively invested in expanding into new markets, which has resulted in rapid user base growth. TikTok is available in over 150 countries and regions worldwide and supports more than 75 different languages. The app has a wide presence in North America, Europe, Asia, Africa, Oceania and South America.

The main markets of TikTok:

• North America: USA, Canada, Mexico
• Europe: UK, Germany, France, Spain, Italy
• Asia: Japan, South Korea, India (although it’s banned there since 2020), Indonesia, Philippines
• South America: Brazil, Argentina, Colombia
• Africa: South Africa, Nigeria, Kenya
• Oceania: Australia, New Zealand

In-App Purchases
The ability for users to purchase virtual gifts and coins has also created a new revenue stream for TikTok.

Advertising
However, most sales are made with advertising. As adoption has skyrocketed, TikTok has also increased its ad revenue by enabling brands to run targeted (personalized) ads.

TikTok, as part of the ByteDance group, has invested in various areas to support growth, improve technology and open up new markets.

1. Technology and Innovation

• Artificial Intelligence (AI): TikTok has significantly in AI and invested in machine learning to improve personalization and user experience.
• Research and Development (R&D): The company has established R&D centers around the world to work on new technologies and products.

2. Global expansion

• Market entry: TikTok has partnerships in marketing and invests to enter new markets and expand its global footprint.
• Localization: Investing in tailoring content and features to local markets and cultures has helped increase adoption across geographies.

3. Content creation and community building

• Influencer Support: TikTok has established programs and funds to support and encourage content creators.
• Education and training: Investments in Educational initiatives to train users in content creation and nurture creative talent.

4. Legal Compliance and Data Protection

• Privacy: In view of the regulatory challenges, TikTok has made legal compliance and Privacy Invested, including setting up data centers in different countries.
• Lobbying and Legal Advice: The Company has also invested in legal advice and lobbying to deal with the legal and regulatory requirements in various jurisdictions.

5. Monetization and Advertising

• Ad Technology: Investing in technology and platforms that enable brands to advertise effectively on TikTok.
• E-commerce integration: Development of e-commerce Functions to enable brands and sellers to sell products directly through the platform.

6. Social responsibility and sustainability

• Social initiatives: TikTok has invested in social and charitable projects, including education, health and environmental protection.
• Sustainability: Investing in environmentally friendly practices and technologies to promote sustainable operations.

TikTok has gained widespread popularity around the world, but there are also serious concerns and criticisms, particularly around the Chinese government and privacy issues.

• Legal Obligations
  In China, as previously mentioned, companies are required by law to share data with the government when necessary. And since China is a dictatorship, there are virtually no significant hurdles for the government to access TikTok’s data. As a result, there are legitimate concerns that user data could be passed on to the Chinese government.

• Censorship allegations
  There have been reports that TikTok has censored content that may be considered sensitive to the Chinese government. This raises questions about freedom of expression and the independence of the platform. But even western platforms like Facebook cannot cover themselves in glory here. Because there is censorship here and there as much as possible, and it is not acceptable.

• Political influence
  The proximity to the Chinese government has also raised concerns about potential political interference. Control over a global platform could be viewed as a soft power tool (form of political influence) are used. The same applies here as for western companies. The more influential social media platforms become due to their high number of users, the less they can still act politically independently. When in doubt, you just have to follow the money trail to get to the source.