Find the Owner of 80 Trillion Won Within 6 Months... The Fate of TikTok's '15-Second Magic' Ticking Away

Last Year's Sales 21 Trillion, Company Valuation at Least 80 Trillion
If Not Sold Within 6 Months, Practically Out

On the 13th (local time), the U.S. House of Representatives passed the 'TikTok Ban Act,' drawing attention to the 'deal of the century.' If the bill passes the Senate and is signed by the President to become law, ByteDance, the Chinese IT company that owns TikTok's U.S. subsidiary, will have to sell TikTok within six months.

If TikTok is not sold within the deadline and remains under ByteDance's ownership, U.S. app stores such as Apple and Google will be required to ban TikTok downloads and updates. This effectively means TikTok will be expelled from the U.S. market.

TikTok influencers in the United States protesting against the sale of TikTok. [Image source=YouTube]

The issue lies in TikTok's 'price tag.' Starting with 15-second video sharing and gaining explosive popularity through the '15-second magic,' TikTok's user base in the U.S. approaches 170 million, and its annual advertising revenue is astronomical. What is the actual value of TikTok's U.S. subsidiary, and who can pay that price?

Making 21 trillion won in the U.S. market alone... Corporate value at least '80 trillion won'

TikTok's owner is ByteDance, headquartered in China. However, due to privacy and personal data leakage concerns related to the Chinese entity, ByteDance has long separated its global service subsidiaries.

As a result, ByteDance established 'TikTok US' in the United States to manage North American operations and 'TikTok Europe' in the UK to operate in Europe and South America (Mexico and Brazil). TikTok's U.S. and UK subsidiaries are massive IT companies employing over 10,000 engineers, managers, and sales staff each. Their revenues exceed tens of trillions of won, and they invest in their own data centers to meet privacy regulations in the U.S. and European markets.

TikTok's parent company, ByteDance, has long operated by separating its global headquarters.

The photo shows TikTok's U.S. headquarters, responsible for North American operations and development (above), and the U.K. TikTok headquarters, in charge of Europe and South America. [Image source=Google Maps, PLA Architecture]

Among these, TikTok US can be called ByteDance's 'golden goose.' According to the Financial Times (FT), TikTok's U.S. subsidiary's revenue was $16 billion (approximately 21 trillion won) last year. TikTok US is a private company and does not trade shares on public markets. However, according to analysis by U.S. financial market research firm CFRA Research, TikTok's corporate value could exceed $60 billion (approximately 80 trillion won).

Moreover, this is likely a somewhat 'discounted' price. Considering TikTok's user growth rate in the U.S. and European markets remains extremely high, and ByteDance is preparing a new business model combining short-form videos and e-commerce, additional growth drivers are secured.

However, the restriction to sell TikTok to a U.S. operator within six months is critical. There is also a view that ByteDance will inevitably have to lower TikTok US's valuation to exit the U.S. market on time.

Can an 80 trillion won company be bought and sold in six months?

So, can a mega-company valued at $60 billion be bought and sold within six months? Experts in the U.S. are skeptical. The Washington Post (WP) pointed out, "This price range is difficult for typical buyers to approach."

There are also regulatory hurdles. WP noted, "Purchases by competitors will undergo detailed antitrust investigations by the U.S. and countries worldwide," adding, "This will slow down the (acquisition) process even more." In fact, delays in mergers and acquisitions (M&A) due to antitrust investigations by competition authorities are common.

Microsoft's (MS) acquisition of Activision Blizzard had to go through successive investigations and legal battles by competition authorities in the U.S., UK, and Europe. Twitter, valued much lower than TikTok US at $44 billion, was acquired by Tesla CEO Elon Musk in exactly six months.