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After President Joe Biden signed a bill that could ban TikTok in the U.S., its Chinese owner ByteDance is considering selling the popular platform.
But a TikTok suitor would need more than both regulatory approval and the stomach to operate a social media company. It would also need the technical chops to rebuild its powerful content recommendation algorithm, which ByteDance plans to strip from the platform when it sells it.
This would lower the value of its U.S. business from $100 billion to $40 billion, according to Wedbush analyst Dan Ives.
“The value of TikTok would dramatically change without the algorithms and makes the ultimate divestiture of TikTok a very complex endeavor with many potential financial bidders waiting anxiously for this process to kick off,” Ives told ADWEEK.
ADWEEK spoke with investors, bankers, analysts and consultants who identified potential companies to buy TikTok—and those who may choose to remain on the sidelines.
Antitrust scrutiny likely would keep Meta and Google on the sidelines, said Sanja Partalo, co-founder and general partner at S4S Ventures.
“They also have the most to gain if TikTok shut down in the U.S or is acquired by an entity that has little experience scaling a social media platform and fumbles the execution. Sitting on the sidelines may be the strategic choice.”
Verizon and AT&T
The telcos Verizon and AT&T could be the frontrunners to buy TikTok, should ByteDance choose to sell its U.S operations, according to Andrew Buckman, vice president of marketing and investor relations at Azerion.
TikTok’s massive user base, particularly its 45% of Gen Z demographic, presents a compelling opportunity for these wireless giants, who typically grapple with reaching and engaging with this audience.
“This generation doesn’t watch cable TV, listen to radio, or read newspaper, and gets its information from TikTok,” said Buckman.
Acquiring TikTok would give these companies an advantage with access to massive user data and expanding its customer base, he said.
Still, TikTok without its algorithm is not an easy lift, and telcos might not have the expertise to rebuild it, Buckman said.
Microsoft
Microsoft nearly acquired TikTok in 2020, and it could re-enter the playing field, said Partalo.
Acquiring TikTok could provide Microsoft with a significant foothold in the social media space, complementing its existing portfolio of products and services and expanding its consumer-facing offerings, said Javier Rodriguez Horta, global marketing strategy practice lead at marketing consulting firm CvE.
“They have an advertising business, a gaming business, both having synergies with TikTok’s business model and user base,” Partalo added.