This should be a free link to the story in the WSJ. Interesting days.
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APP has a slim chance, Amazon and Oracle seem to be the leading candidates. Bezos kissed the Ring earlier this year and Ellison is Musk’s close friend and Mentor.
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Tim Stokely has announced an intention to bid for TikTok. Read more on SA:
Applovin CEO Adam Foroughi was on Fox Bret Baier Special Report today. Sorry, I do not see the video clip published yet so I cannot link it. (Bret Baier minute 43 April 3) Foroughi said that Applovin has a market cap of $100B (maybe less today) and that they propose a merger with TikTok. Three security issues exist: algorithm, data location, and tracking. Oracle has solved the US based data problem. Oracle would provide the cloud service. Applovin would take the algorithm and pair with Applovin algorithm for advertising. This would unlock job creation by supporting small businesses with more effective advertising. Lastly Adam said this would expand with partnerships with foreign countries internationally for services.
I am not sure Applovin is big enough to swallow TikTok. If Twitter was worth at purchase $60B (now $30B estimated) then I would expect TikTok to at least be worth this much. So some special financing would be essential. But I guess maybe Trump can put some deal together to satisfy the Chinese, who will not likely to walk away quietly. Or maybe Oracle becomes some kind of partner. dunno But I doubt Amazon would be allowed to acquire per the FTC. So stay tuned. If a deal is done with Applovin, Applovin becomes a whole different company with a whole different valuation.
-zane
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It will be a very interesting development if APP has a successful bid. Obviously, the primary objective would be capturing the amazing database that TT must hold. The application is more or less similar to the gaming business APP just sold, only this one I assume is a rapidly growing segment. I wonder how Adam would integrate that with the advertising business.
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I am pretty surprised to see APP making a bid for TikTok. Adam Foroughi has spoken before that he generally doesn’t like acquisitions as he’s seen the pitfalls of merging two separate companies with different business models and company cultures.
With that in mind, I believe AppLovin has a clear plan in place for how they would connect TikTok to their e-commerce pilot. My guess is they’ve seen the leverage the company would have if they combine one of the most popular and growing social networks and hook it up to their AI-based ad system.
This would definitely be a whole different company as mentioned as above if the acquisition goes through. The company would be a more direct competitor to Meta at that point. One last thought is maybe AppLovin can run on TikTok even without acquiring it, but they thought it would be better to control that engine too.
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APP trading at 18 X NTM EBITA, quite a bargain I think, especially when it is expected to grow EBITA 30% over the next couple of years.
Obviously, if they did acquire TikTok that EBITA could end up much higher. Interesting times for sure.
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Just a thought that this is still all “story” and if you try to predict this you are gambling, not investing. I am still out of App until they prove they are growing again and get past this controversy.
This is what I expect our founder would have done.
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I’m not sure what you mean by “until they prove they are growing again”. APP hasn’t quit growing. There hasn’t been a pause in growth, not a slowdown, nary a hiccup, for quite a few quarters now.
As to “controversy” are you talking about the short reports? I guess that qualifies and we will see if it has any impact on growth but to date there is no evidence of a slowing of revenue or profit growth.
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The Chinese government has called off any sale of TikTok in response to the new Trump tariffs. So App buying TikTok is now a moot point. In response Trump extended the deadline for selling it to mid-June. It’s not entirely over, but should the tensions continue it seems very unlikely to go forward. https://www.nytimes.com/2025/04/07/technology/trump-tiktok-china-tariffs.html
Here is a WSJ article with a broader scope of discussion: https://www.wsj.com/tech/trump-grants-75-day-extension-to-reach-tiktok-deal-10f75554
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I’d like to explore what I believe to be the most likely outcome and why I believe a three-way partnership involving AppLovin, Oracle, and ByteDance makes the most business sense for ByteDance, under the conditions that (1) a global partnership is required and (2) ByteDance must leave TikTok’s algorithm in place. This is not investment rationale; but, I’d like to get the opinions of y’all here.
This above scenario suggests ByteDance is divesting TikTok globally, X-China, as CEO of Applovin suggested recently in an interview (not just in the U.S.); he did not specify retaining a partnership role with Oracle as co-buyers, that’s me extrapolating. He did say , ‘ensuring the algorithm is integral to TikTok’s global operations and would be part of any deal with Applovin’. I’ll focus on how this specific trio maximizes ByteDance’s strategic, financial, and operational interests, leaving trade war dynamics aside.
Key Assumptions and Context
- Global Partnership Required: ByteDance must divest TikTok’s global operations (not just U.S.) due to regulatory or strategic pressures, but retains a partnership stake (e.g., minority ownership, technical role, or revenue-sharing) with AppLovin and Oracle as co-owners.
- Algorithm Stays in Place: ByteDance can transfer or license TikTok’s algorithm globally, and it remains the platform’s backbone. The buyers must be capable of utilizing it effectively.
- ByteDance’s Goals: Maximize TikTok’s valuation (global operations could be worth $100-300 billion), preserve its operational success (algorithm and user base), and maintain influence/profitability through the partnership.
- AppLovin + Oracle + ByteDance: AppLovin and Oracle split ownership responsibilities, with ByteDance as a partner, creating a complementary structure.
Why This Partnership Makes the Most Business Sense for ByteDance
1. Complementary Strengths Optimize TikTok’s Value
A three-way partnership leverages each party’s unique capabilities, ensuring TikTok’s global ecosystem thrives while addressing ByteDance’s needs:
- AppLovin’s Ad Tech Expertise: AppLovin, with its $89 billion market cap and machine-learning-driven ad platform (AXON), specializes in mobile advertising and user acquisition. Since TikTok’s algorithm stays in place, AppLovin can integrate its ad optimization tools to enhance TikTok’s $18 billion+ annual ad revenue (2023 estimate). This synergy boosts monetization—a core priority for ByteDance—across TikTok’s 1.5 billion global users.
- Oracle’s Infrastructure Backbone: Oracle, valued at $400 billion, brings robust cloud computing (Oracle Cloud Infrastructure) and enterprise-grade data management. It can host TikTok’s algorithm and user data at global scale, ensuring technical stability and compliance with regional regulations (e.g., GDPR in Europe, data laws in India). This reduces operational risk for ByteDance and its partners.
- ByteDance’s Algorithm and Vision: ByteDance contributes the algorithm—TikTok’s competitive edge—and its expertise in user engagement and content curation. Retaining a partnership role allows ByteDance to guide TikTok’s creative direction, ensuring the platform doesn’t lose its viral, user-driven essence under new ownership.
Together, this trio covers TikTok’s key needs: monetization (AppLovin), infrastructure (Oracle), and innovation (ByteDance). No single buyer could match this breadth, making the partnership ideal for preserving TikTok’s global value.
2. Financial Viability for a Global Deal
TikTok’s global operations command a massive valuation ($100-300 billion, depending on whether the algorithm’s inclusion inflates estimates). A partnership splits the financial burden:
- AppLovin’s Contribution: While AppLovin alone couldn’t fund a global acquisition (its market cap is $89 billion), it can cover a significant portion (e.g., $50-80 billion) via cash, debt, or equity, focusing on ad-related operations. Its involvement ensures TikTok’s revenue engine gets a boost, justifying ByteDance’s payout.
- Oracle’s Deep Pockets: Oracle’s $400 billion valuation and strong cash reserves allow it to finance the lion’s share (e.g., $50-150 billion), particularly for infrastructure and data-heavy regions. This guarantees ByteDance a lucrative upfront payment, critical for a global divestiture.
- ByteDance’s Stake: By retaining a minority stake (e.g., 20-30%), ByteDance reduces the cash buyers need to raise while securing ongoing revenue or equity upside. This structure maximizes ByteDance’s financial return without fully exiting TikTok’s future profits.
A solo buyer like Microsoft or Amazon could afford TikTok but might face antitrust hurdles globally. AppLovin and Oracle, with narrower focuses, avoid such scrutiny, and their combined resources match TikTok’s scale.
3. Regulatory Compliance Across Markets
A global partnership must satisfy diverse regulators (e.g., U.S., EU, India, Australia), many of whom demand local data control and security:
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Oracle’s Regulatory Edge: Oracle’s enterprise reputation and experience with Project Texas (hosting TikTok’s U.S. data) make it a trusted player for regulators. It can replicate this model globally, ensuring compliance with data localization laws while keeping the algorithm operational.
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ByteDance’s Reduced Role: By partnering rather than owning, ByteDance mitigates national security concerns tied to its Chinese origin, while still contributing the algorithm. This balances regulatory demands with ByteDance’s desire to stay involved. ByteDance’s long-term ownership gracefully retains influence over TikTok’s algorithm-driven success, and partners with two players whose synergy exceeds any solo buyer’s potential.
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I don’t know . . . This is a matter of second guessing the motivation of those parties who have expressed an interest in TT.
My guess (emphasis on guess) is that Adam Foroughi is no more interested in a deep involvement in TT than he was in AppLovin’s gaming segment. I think his interest resides in the TT database to a much greater extent than it’s algorithm let alone daily management of the business. The database would provide AppLovin with a rich resource supporting AI development and training in an area in which they currently do not have much of a resource at all.
Oracle for sure would like to host the app and provide storage for the mountains of data it must collect - but I have my doubts about whether they would want to take on the staff and provide daily management. It doesn’t really fit their business model, or at least it wasn’t a fit when I last paid any attention to Oracle which was quite a long time ago.
Bytedance is the obvious candidate to manage the operations of TT, but would that be a satisfactory situation given the main reason that the government is demanding the separation from the Chinese company in the first place? I don’t know the answer to that question, but it seems somewhat dubious to me.
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Wanted to add this clip from Adam Foroughi on CNBC a few days ago, explaining his thoughts on the bid for AppLovin. He says they have the best possible solution for all parties. Sounds like they have some ideas how to get the Tiktok business to be compliant with Western regulations.
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