Amazon and AppLovin have submitted late bids to buy TikTok, according to reports this morning, days before Saturday’s deadline that would enforce a ban on the video-sharing app in the US. Tim Stokely, Founder of OnlyFans, has also mounted a bid backed by a cryptocurrency foundation, Reuters reported on Wednesday.
The deadline was extended back in January, when Donald Trump said he would delay the TikTok ban and suggested the Chinese business enter a 50 percent joint venture with US investors. A number of prospective buyers have since emerged, most prominently tech giant Oracle, whose offer to help run TikTok in the US was reportedly reviewed by White House officials this week.
But the deal under discussion is said to preserve a role for ByteDance, TikTok’s Beijing-based parent company, and has been met with opposition by Republican lawmakers. On Tuesday, Rep. John Moolenaar, Chair of the House Select Committee on China, wrote in The National Review: “The law is clear. Any deal must eliminate Chinese influence and control over the app to safeguard our interests.”
And while new bidder Amazon has been seeking to add a social media side to its giant tech business, sources cited in the New York Times suggest officials involved in the talks are not taking the offer seriously.
AppLovin would seem a more likely candidate given its experience in the mobile business, and has rocketed in value over the past six months thanks to developments in its AI capabilities for app monetisation. But buying TikTok would also represent a change in strategy for the mobile ad tech firm, having announced plans to offload its apps business to become a pure advertising platform.
Hooked on TikTok
Vice President JD Vance has said there would “almost certainly” be an agreement reached by Saturday, though the fate of the platform remains unknown.
“It is highly unlikely that TikTok will go dark again,” comments Kelsey Chickering, Principal Analyst at Forrester. “All signs point to a deal or another extension.” But whether TikTok retains its popularity under new ownership could depend on the nature of the deal. Chickering notes that TikTok’s value is in its algorithm, which may or may not be included as part of the sale.
“TikTok without its algorithm is like Harry Potter without his wand – it’s simply not as powerful,” she says. “TikTok operates on a content graph, not a social graph, which means it analyses thousands of user signals to determine what content and creators the user will want to watch, making it hyper relevant and highly addictive. In fact, our data shows 31 percent of US online adults consider TikTok to be addictive, more than any other social media platform.”
And 54 percent of TikTok users expressed concerns that the app being run by a different company could negatively affect the experience, according to a Forrester survey. “If the TikTok experience degrades, users, creators, and advertisers will spend more time and money on other media channels.”
Social vs entertainment
Indeed, when TikTok briefly shut down in the US ahead of January’s initial deadline, global creator agency Billion Dollar Boy saw an increase of creator posts on Instagram and YouTube, with audiences “gravitating more toward Instagram over YouTube” in response to the 24-hour TikTok blackout.
“Content creation shifted in near equal measure to YouTube Shorts and Instagram Reels,” comments Thomas Walters, Europe CEO and Co-Founder of Billion Dollar Boy. “Typically, with increased content creation, we would expect that to translate into a decline in viewership as competition on the platform increases. However, viewership has remained consistent on Instagram, highlighting its ability to retain audience engagement regardless of how saturated the user’s feed becomes. Brands looking to futureproof their social media strategies should prioritise Instagram – which appears to be the platform of choice, for now – while also continuing to diversify their platform presence as best practice.”
But Forrester’s findings suggested that TikTok users tend to view the platform more as video entertainment than social media, and 51 percent of respondents said they would spend more time on YouTube in the event of a shutdown, followed by TV (41 percent) and then Instagram (33 percent).
“Instagram Reels arguably has the most comparable experience to TikTok, so it’s telling that television and YouTube are ranked higher,” notes Chickering. “It means the swap for TikTok is about finding the next best place for entertainment, not social networking.”
Winners and losers
And that shift in viewing is also expected to direct the flow of ad spend. “Digital video (including YouTube), not social media channels, is the top media channel B2C marketing executives will shift marketing dollars to if TikTok shuts down again,” says Chickering.
Aaron Goldman, CMO of ad tech firm Mediaocean, agrees that “ad spend will likely migrate to other social platforms and CTV where audiences are highly engaged with video.”
Meanwhile findings from MikMak, an ecommerce analytics firm, suggest that retail giants such as Amazon, eBay and Walmart would gain a sizeable share of any loss from the closure of TikTok’s ecommerce business, alongside gains for Google, whose ad revenue has been impacted by the rise of the short-form video app.
But regardless of the outcome of this week’s discussions, uncertainty around TikTok is likely to persist. Nick Morgan, Founder and CEO of ad tech business Vudoo, says the deadline should act as a “wake-up call” for brands relying on social media platforms. “The value of these walled gardens can vary, fluctuating with the changing preferences of audiences and external forces, like we’re seeing with TikTok.”
