How TikTok Makes Money

By Rachel Warren – Updated Oct 2, 2025 at 4:00 PM | Fact-checked by Frank Bass

Key Points

TikTok, owned by ByteDance, merged with Musical.ly, reaching 1 billion downloads by 2019.
U.S. law signed in 2024 forced ByteDance to sell TikTok by January 2025 or face a ban.
TikTok makes money through ads, e-commerce on its platform, and in-app purchases.

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.

Loading paragraph...

Person filming a social media video. — Image source: Getty Images.

Loading image...

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.

Loading paragraph...

Revenue

Revenue is a business’s gross income or the amount of money it brings in from regular operations before costs are considered.

Loading definition...

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.

Loading paragraph...

Loading pitch...

Loading paragraph...

Loading pitch...

Loading paragraph...

Related investing topics

Loading paragraph...

Investing in Social Media Stocks

Social media has changed the way we communicate with each other.

Who Owns X (Formerly Twitter)?

X (formerly known as Twitter) was taken private in 2022. Who owns it now?

How to Invest in Facebook Stock (META)

Get step-by-step guidance on investing in Facebook stock and learn the ins and outs of this massive media company.

Investing in Tech Stocks

This vast sector is composed of some of the most valuable companies in the world.

Loading hub_pages...

Loading paragraph...

Loading pitch...

Loading paragraph...

Loading faq...

About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

TMFRachelW

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.