How much is TikTok actually worth?

Some estimates have put the app at close to $50 billion, given its meteoric growth and large user base. Official predictions suggest that Microsoft, or any other suitor, will need to pony up between $10b and $30b to purchase the short-form video app – and for comparison, Instagram is reportedly worth around $100 billion.

It stands to reason that TikTok could be worth around half of Instagram’s price – but then again, that depends on what exactly they would be getting for that price.

TikTok has – or had – around 900 million users worldwide, but the vast majority of them are in India and China. Microsoft wouldn’t get the Chinese users of Douyin, the local version of TikTok (400m users) and the app is now banned in India (potentially 200m users). That leaves around 300m users, 100m of which are reportedly in the US.

That’s not as impressive as the 900m user stat that many are discussing – but when you also consider that, maybe, TikTok would be allowed back into India if it weren’t Chinese owned, it could be 500m. Possibly.

Could TikTok make a comeback in the Indian market and get back to its previous usage levels? 

And if that’s not possible, what’s a video app with 300m users worth on the current market?

These are just some of the many questions that the tech giants face in weighing a potential takeover bid for TikTok, which has until September to arrange a sell-off, or it faces a total ban in the US. Already, Apple has ruled itself out of the running for the app, while you would think that Facebook, Amazon and Google would see signifiant pushback if they entered a bid, given that they’re already subject to an antitrust probe for potentially abusing their marketing dominance.

That narrows the field, and leaves Microsoft as the key player – but even if Microsoft were the sole bidder for the popular app, there are still many considerations it needs to factor into its approach.

There’s the additional consideration, for example, that a portion of the sale price may have to go to the US Government, which US President Donald Trump noted in his announcement of the deadline for a TikTok deal.

As per President Trump:

“A very substantial portion of that price is going to have to come into the Treasury of the United States, because we’re making it possible for this deal to happen.”

How does that get factored into the sale price, if indeed that is a condition of the deal?

The bidding company also needs to consider the labor effort required to separate the app, with, reportedly, some 15 million lines of code that will need to be cut off from TikTok’s Chinese parent company to separate the app.

How, also, does TikTok get split? The current discussion would see TikTok’s operations in some regions split away from ByteDance, but other regions would, theoretically, not be impacted. You would expect that, eventually, any deal would include all of TikTok, in all regions, eliminating this concern – but still, it’s another complication to the arrangement.

But possibly the most significant consideration for any of the major tech players could be a potential clash with the Chinese Government over the sale.

According to the Nikkei Asian Review:

“Plans for Chinese streaming app TikTok to sell its U.S. operations amid regulatory headwinds there have elicited outrage in China, with Beijing threatening repercussions if the deal goes through and internet users condemning the app’s owner as a “traitor.”

Microsoft generates a significant chunk of revenue within China. Would a deal to purchase TikTok put that business at stake?

The CCP has already ordered that all foreign computer equipment and software be removed from government offices and public institutions within three years due to the ongoing trade war with the US.

Could it be worth more for the company to not pursue a TikTok deal?

And again, when you factor all of this in, what is TikTok actually worth – is an app, with 300m users, that’s already in Facebook’s sights, really worth billions?

It does seem that, somehow, a deal will be made, and TikTok will continue. But the various factors at play raise significant questions about the true value of the app.