What Is TikTok, How It Works and Why It Is So Popular

TikTok, launched in September 2016, is a popular social media application that allows users to create, watch, and share short videos filmed on mobile devices or webcams. Thanks to personalized feeds featuring original short videos accompanied by music and sound effects, the app is known for its addictive nature and high user engagement rate. However, its Chinese owner has sparked controversy due to concerns that the Chinese government could use it for propaganda purposes and to collect user data.

Key Points

• TikTok allows users to watch, create, and share short videos online.
• The app was launched in 2016 by Chinese technology company ByteDance.
• Concerns about ByteDance’s Chinese ownership and possible ties to the Chinese government have made TikTok controversial in some countries, particularly in the United States.

In April 2024, American lawmakers passed a law, signed by former President Biden, that bans the use of the TikTok app in the US unless its parent company ByteDance sells it within one year. [1] In response to the ban, which was set to take effect on January 19, 2025, ByteDance temporarily deactivated the service in the United States but restored it after newly elected President Donald Trump promised to extend the deadline upon taking office on January 20, 2025 [2]

What is TikTok?

TikTok’s short video format lends itself to entertainment and comedy. However, it is increasingly being used for infotainment. Influencers who have built a steady audience on TikTok offer advice and tips in addition to self-promotion. Popular topics for informational videos include beauty, fashion, personal finance, budgeting, and cooking. The format is increasingly being used to promote and sell products.

TikTok, which was launched in its current form (following its merger with Musical.ly in 2018), joined the ranks of social media giants in record time. By February 2024, it had been downloaded approximately 4.7 billion times. [3] [4]

Like other social media companies, TikTok is subject to ongoing concerns about the possible use or misuse of the private information it collects about its users. It has come under particular scrutiny because the majority of TikTok is Chinese-owned. [5]

TikTok’s Launch

The name TikTok is meant to suggest the short video format. The app was launched in September 2016 by Chinese startup ByteDance and is known there under the name Douyin. Its rocket-like growth in user numbers began in late 2017, when it purchased the competing app Musical.ly and transferred its 200 million accounts to TikTok. [3]

According to information from mid-2020, ByteDance was valued at up to $140 billion, based on a private sale of a small stake in the company. In 2023, TikTok’s value was estimated at $66 billion. This would make it the most valuable startup in the world. [4] [6]

TikTok’s Business

Marketing on TikTok is still in a maturing phase, but more and more agencies are trying to help brands create original content that attracts attention on TikTok. Traditional advertising that emphasizes a product’s outstanding features does not work here.

Instead, brands open user accounts on TikTok and, just like other users, create and post short videos. They can also pay to promote their videos to other users. The ultimate goal is to achieve viral popularity and encourage further sharing, thereby getting the brand’s message out to a massive audience. Light, fun campaigns accompanied by music are the way to go.

Some of the most successful marketing campaigns on TikTok:

• The restaurant chain Chipotle ran a Halloween campaign called „Boorito,“ in which it distributed coupons and encouraged TikTok users to dress up for the holiday and post their photos. The campaign recorded four billion views. [7]
• e.l.f. Cosmetics partnered with several social media influencers to create an online reality show and contest called #eyeslipsface. The advertising campaign recorded 10.4 billion clicks by January 2024. [8] [9]
• The NBA created an account and had 21.7 million followers by May 2024. Its goal is to increase global awareness of the NBA, particularly among young people. [10]

TikTok is headquartered in Los Angeles and Singapore, with offices in New York, Berlin, Dublin, Jakarta, London, Paris, Dubai, Seoul, and Tokyo. [11]

Like many other social networks, TikTok makes money from in-app purchases, which significantly contribute to its revenue.

Quick Facts

Since January 2014, more than 900 apps have been launched around the world hoping to capitalize on TikTok’s popularity. [13]

TikTok’s User Base

As of 2024, TikTok is available in more than 150 markets and in more than 50 languages.

Here is an overview of some of the app’s most significant statistics as of 2024:

• Approximately 36.7% of users are between the ages of 18 and 24.
• 52% are women and 48% are men.
• In 2023, it will have 102.3 million users in the US.
• 30.8 million daily active users via iOS.
• Children spend an average of 75 minutes per day on it.

TikTok and Political Controversy

Like most social networks, TikTok is not immune to controversy. TikTok and many other Chinese apps were banned in India in mid-2020 as a threat to the country’s sovereignty. This step came amid rising tensions between the two countries. [14]

Banned in Bangladesh

TikTok is also banned in Bangladesh. In Indonesia, it was briefly banned due to „pornography, inappropriate content, and blasphemy,“ but the ban was lifted a week later after the company promised to remove all inappropriate content from the platform and establish a local office to monitor and censor content. [15]

Uncertain Legal Future in America

In February 2019, the company paid $5.7 million in the US to settle allegations that it had illegally collected personal data from children. This was the highest civil penalty ever imposed by the Federal Trade Commission (FTC) in a case involving children’s privacy. [16]

However, this was not the end of TikTok’s problems in the USA. From July 2020, then-President Donald Trump launched a public attack on TikTok and threatened to ban it in the USA, arguing that the Chinese Communist Party could use the collected user data to spy on American citizens. He demanded that TikTok be sold to American interests to eliminate this threat. [17] [18] In September 2020, Trump declared that he had resolved the issue. TikTok’s American operations would be separated from its Chinese owner, ByteDance, and incorporated into an American company. [18]

The proposed deal would have led to the creation of a new spun-off company, TikTok Global. Oracle would own a 12.5% stake in the company and become its cloud services provider in the USA. [19] In addition, Walmart preliminarily agreed to purchase a 7.5% stake in TikTok Global. It planned live-streamed shopping events hosted within the app. The remaining 80% would remain owned by ByteDance. [20] [21] The deal collapsed in 2021. [22]

In 2022, a bipartisan bill banning TikTok was introduced in the U.S. House of Representatives and Senate. [23] The bill was ultimately passed by both chambers and signed by former President Biden on April 24, 2024. The law took effect in January 2025, but newly elected President Trump declared: „We have to save it.“ He promised to issue an executive order delaying the implementation of the law while further negotiations continue.

Under Investigation in Europe

Meanwhile, in February 2024, the European Commission launched formal proceedings to investigate whether TikTok had violated the European Union’s Digital Services Act (DSA) in connection with „the protection of minors, advertising transparency, data access for researchers, and risk management related to addictive design and harmful content“. [24] In April 2024, the Commission launched a second investigation, this time concerning TikTok’s rewards program on the TikTok Lite platform. [25]

Which Company Owns TikTok?

The majority owner of TikTok is the Chinese technology company ByteDance. At the end of 2020, under pressure from the Trump administration, ByteDance agreed to establish a new company, TikTok Global, in partnership with Oracle and Walmart as minority owners and American partners. [21] However, this deal was never realized. In 2024, a new federal law was passed ordering TikTok to change ownership or face a ban in the USA. [1]

How Can I Invest in TikTok Stock?

This is currently not possible, as TikTok remains entirely privately owned by ByteDance. If a spin-off of the company or part of it were to occur as a result of the current pressure from the USA, the situation could change.

Is TikTok Banned?

As of 2024, TikTok is banned in India and Pakistan. In other countries, including Indonesia and Bangladesh, it was banned for a short period but subsequently allowed again. [26] In the USA, it faces a ban if the company does not carry out a spin-off by January 2025, the deadline set by Congress. It remains to be seen whether Trump will enforce this law during his term in office. [1]

Final Summary

TikTok is an immensely popular web application worldwide. However, its Chinese ownership has proven to be problematic, leading to several bans and threats of bans, most recently in the United States.

Sources

1. CNN. „Biden Just Signed a Potential TikTok Ban Into Law. Here’s What Happens Next.“
2. Reuters. „TikTok Restores US Services After Trump Says ‚We Have to Save it.‘„
3. Harvard Business Review. „The Strategy Behind TikTok’s Global Rise.“
4. Social Shepherd. „21 Essential TikTok Statistics You Need to Know in 2024.“
5. Congressional Research Service. „TikTok: Technology Overview and Issues.“ Page 1.
6. Reuters. „Exclusive: ByteDance Investors Value TikTok at $50 Billion in Takeover Bid—Sources.“
7. Bloomberg. „TikTok Marketers Chase Billions of Views in Uncharted Terrain.“
8. The Shorty Awards. „e.l.f. Cosmetics‘ Innovation on TikTok.“
9. TikTok. „e.l.f. Cosmetics: #eyeslipsface.“
10. TikTok. „NBA.“
11. TikTok. „About TikTok Page.“
12. Dot.LA. „The Secret to TikTok’s Success With In-App Purchases.“
13. Sensor Tower. „TikTok Has Spawned Its Own Ecosystem of Nearly 1,000 Apps Totaling 1.3 Billion Downloads.“
14. TikTok. „Home Page.“
15. Associated Press. „TikTok May Be Banned in the U.S. Here’s What Happened When India Did It.“
16. Dhaka Tribune. „High Court to Govt: Ban TikTok, PUBG, Free Fire, Other Dangerous Apps.“
17. Federal Trade Commission. „Video Social Networking App Musical.ly Agrees to Settle FTC Allegations That It Violated Children’s Privacy Law.“
18. NPR. „Why President Trump Wants to Push for a TikTok App Ban.“
19. Congressional Research Service. „TikTok: Technology Overview and Issues,“ Summary Page.
20. Oracle. „Oracle Chosen as TikTok’s Secure Cloud Provider.“
21. Walmart Corporate. „Walmart Statement About Potential Investment in and Commercial Agreements With TikTok Global.“
22. Congressional Research Service. „TikTok: Technology Overview and Issues.“ Page 6.
23. The Wall Street Journal. „TikTok Sale to Oracle, Walmart Is Shelved as Biden Reviews Security.“
24. Marco Rubio. „Rubio, Gallagher Introduce Bipartisan Legislation to Ban TikTok.“
25. European Commission. „Commission Opens Formal Proceedings Against TikTok Under the Digital Services Act.“
26. European Commission. „Commission Opens Proceedings Against TikTok Under the DSA Regarding the Launch Of TikTok Lite in France And Spain, And Communicates Its Intention to Suspend the Reward Programme in the EU.“
27. Demandsage. „How Many Countries Have Banned TikTok? (2024 Data).“