TikTok is a short-form video social media app owned by Chinese tech company ByteDance. The platform was formed when ByteDance merged its popular Chinese app Douyin with the American lip-sync app Musical.ly, which ByteDance acquired in late 2017. The apps were combined in August 2018, with the new platform adopting the TikTok name for international markets. TikTok reached the 1 billion download threshold in 2019.
Since 2020, TikTok has grown into a global phenomenon and become the most downloaded app in the world. However, this growth has been overshadowed by persistent government scrutiny in the United States and elsewhere over its Chinese ownership, leading to a ban-or-sell ultimatum and a series of legal and political battles. ByteDance was first ordered to divest its U.S. operations in 2020.
At the time, companies like Microsoft (MSFT -2.82%) pursued a purchase, but no deal materialized, partly due to opposition from the Chinese government. The ban ultimately stalled. Then in 2024, a bipartisan ban-or-sell bill passed overwhelmingly in Congress that required ByteDance to sell TikTok within a year or face a nationwide ban. Former President Joe Biden signed the bill into law in April 2024, setting a deadline of Jan. 19, 2025, for the divestment.
Revenue
TikTok sued the U.S. government over the law, arguing it violated the First Amendment rights of its users. The company also launched a massive in-app campaign urging users to contact Congress in opposition to the ban. In December 2024, the U.S. Supreme Court upheld the ban-or-sell law. As the Jan. 19 deadline arrived, TikTok voluntarily suspended its services in the U.S., displaying a ban message to millions of users.
Upon taking office for his second term, President Donald Trump signed a series of executive orders delaying the ban's enforcement and granting ByteDance more time to secure an American buyer. He continued to grant extensions throughout 2025. The future of TikTok in the U.S. remains uncertain until a final deal is approved and implemented, although several updates have occurred on that front in 2025. Here’s what investors need to know about what TikTok does, how it makes money, and more.
What does TikTok do?
TikTok is a social media platform for creating, sharing, and discovering short-form videos. Users can upload their own content with music, effects, and filters, or watch a personalized, algorithm-driven feed of videos on various topics, from entertainment to DIY and educational content. The app is known for its emphasis on authentic, user-generated content and its ability to foster trends and viral challenges within a vast global community.
TikTok's core gathering place for content is its For You page, which uses its proprietary machine-learning algorithm to show users content tailored to their interests, even from people they don't follow. Beyond the For You feed, users can explore content through the search tool, explore page, or by following hashtags and other users. While TikTok began with music and lip-syncing videos, it now features a wide range of content, including comedy, educational videos, cooking, fashion, and more.
Users can interact with videos through comments, shares, and duets (creating new content alongside another user's video). The platform provides tools and features to help users learn about their content's performance, build a community, and potentially monetize their creations. A key aspect of TikTok's culture is its emphasis on authentic, relatable content, which can lead to higher engagement compared to aesthetically perfect content.
TikTok has introduced new artificial intelligence (AI)-powered features, such as AI Alive, which allows users to turn still images into videos within TikTok Stories. Advertisers on TikTok can also now connect with users on other messaging apps like Meta Platform’s (META -11.31%) WhatsApp and Messenger and receive direct messages from livestreams to acquire new customers.
ByteDance is headquartered in Beijing. However, TikTok has dual global headquarters in Los Angeles and Singapore. TikTok has long maintained that it operates separately from ByteDance, especially concerning its U.S. data and content moderation. According to TikTok, about 60% of ByteDance is owned by global institutional investors, 20% by the company's founders, and 20% by employees.
How does TikTok make money?
TikTok makes money primarily through in-app advertising, where businesses pay to show ads within users' feeds and other content. TikTok also makes money from e-commerce sales through its integrated platform, TikTok Shop. TikTok charges a commission fee, which varies by product category, on every sale conducted through TikTok Shop.
The platform supports various social selling features, such as shoppable videos, live shopping, and creator affiliate links, all designed to keep users within the TikTok ecosystem to discover and purchase products. Additional revenue streams include in-app purchases of virtual coins that users buy to send gifts to creators during livestreams, and branded content initiatives like hashtag challenges and effects.
TikTok's financials
ByteDance reportedly generated total revenue of $155 billion in 2024, up 29% from the prior year. About $39 billion of the total was international revenue, which is primarily driven by TikTok, so the app could account for about a quarter of its parent company's overall annual revenue.
Around 80% of TikTok's revenue comes from advertising, with the remainder from e-commerce and in-app purchases. In 2024, TikTok's brand value was estimated to be around $84 billion.
Related investing topics
FAQ
About the Author
Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends KKR, Meta Platforms, Microsoft, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
